Gap Inc (NYSE:GPS). shares jumped around 5% after hours on Thursday after it posted better-than-expected earnings for the crucial holiday quarter, driven by the long-awaited return to form of the Old Navy chain.
EPS for the three months ended December 31 were 49 cents, more than double the Street's figure of 23 cents, while revenue was $4.3 billion.
Despite a slight overall sales increase to $4.3 billion, the retailer experienced flat comparable sales, with a mix of a 4% increase in in-store sales and a 2% decrease in online sales, which constituted 40% of total revenue.
It highlighted more effective management as reducing inventory by 16% during the fiscal year and focusing on minimising promotions to encourage full-price sales.
Looking ahead, Gap said it remains cautious due to the uncertain consumer environment, expecting flat sales in the current quarter and the full year.
CEO Richard Dickson pointed to the challenges faced in 2023, including inflation and high interest rates, but expressed optimism about the brand's direction and marketing innovations.