GPS Gap Inc

By Josh Beckerman 

Gap Inc. gave rosy guidance for the fiscal year ended Jan. 30 even though sales declined overall in the fourth quarter and comparable-store sales at the retailer's three major brands dropped in January.

Shares, up 4.7% in the past month, rose 3.1% to $24.74 in after-hours trading.

Gap said it projects full-year earnings per share, excluding items, to come in at $2.41 to $2.42. That is at the high end of earlier guidance.

The San Francisco company said overall sales for the fourth quarter totaled $4.39 billion, down 7% from $4.71 billion in the year-earlier period. Analysts polled by Thomson Reuters had forecast sales of $4.46 billion. Gap said the decline was 5% when the impacts of currency fluctuations were stripped out.

Retailers have faced challenges recently including unusually warm weather that has damped demand for coats, sweaters and other winter gear. In addition, tourists visiting the U.S. are spending less due to a stronger dollar. These issues have prompted some retailers to cut prices to attract shoppers.

Gap has been struggling to revamp its namesake brand. The company brought on new leadership, including former Banana Republic veteran Wendi Goldman, who had led the Pink line at Victoria's Secret. It has also been working through cost-cutting measures.

In January, comparable-store sales declined 6% at Gap, 17% at Banana Republic and 6% at Old Navy. According to Gap's recorded sales call, Old Navy sales were hurt by the shift of three "Super Cash" redemption days to February this year from January of last year.

Sales at Gap's three main brands also declined in December.

Gap is slated to release full fourth-quarter results Feb. 25.

Write to Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

February 08, 2016 18:19 ET (23:19 GMT)

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