Gap Shares Rally On Strong Earnings, Total Comps Up 5%

Gap Inc. (GPS - Free Report) just released its fourth quarter fiscal 2017 financial results, posting earnings of 61 cents per share and revenues of $4.8 billion. The stock is 9% to $34.55 per share shortly after the report was released.

Currently, GPS is a #2 (Buy) on the Zacks Rank, and our consensus estimate trend has increased for the next few periods.

Gap:

Beat earnings estimates. The retail giant reported earnings of 61 cents per share, surpassing the Zacks Consensus Estimate of 59 cents per share.

Beat revenue estimates. The company saw sales of $4.8 billion, topping our consensus estimate of $4.68 billion and growing 8% year-over-year.

Gap delivered its fifth consecutive quarter of positive comparable sales growth, up 5% this quarter. Breaking it down by brand, Old Navy saw 9% comps, Gap Global saw flat, and Banana Republic had 1% growth.

The company also reported fiscal 2017 gross margin expansion of 200 basis points.

For fiscal 2018, Gap expects diluted EPS in the range of $2.55 to $2.70 and comparable sales to be flat to up slightly.

“Our strong positive comp and margin expansion during the critical holiday quarter affirms our balanced growth strategy,” said Art Peck, president and chief executive officer, Gap Inc. “Our outlook for 2018 demonstrates confidence in our strategy and a meaningful step up in earnings capacity for the company.”

“We are positioning the company for long term growth,” said Teri List-Stoll, executive vice president and chief financial officer, Gap Inc. “In addition to leveraging productivity initiatives to fund investments in the business, recent tax reform changes provide a meaningful increase in future earnings.”

Here’s a graph that looks at Gap’s price, consensus, and EPS surprise:

Gap, Inc. (The) Price, Consensus and EPS Surprise

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The Gap, Inc. is a global specialty retailer which operates stores selling casual apparel, personal care and other accessories for men, women and children under the Gap, Banana Republic and Old Navy brands. The company designs virtually all of its products, which in turn are manufactured by independent sources, and sells them under its brand names.

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