Gap Inc. (NYSE: GAP) surged over 18% in premarket trading after reporting better-than-expected Q4 earnings and a 10% dividend increase. The retailer posted adjusted earnings per share (EPS) of $0.54, beating analyst estimates of $0.36. Revenue reached $4.1 billion, slightly surpassing the forecast of $4.07 billion, with comparable sales rising 3% year-over-year.
CEO Richard Dickson highlighted the company's continued market share gains and strong financial performance, marking its eighth consecutive quarter of growth. For fiscal 2024, Gap reported net sales of $15.1 billion, up 1% from the previous year, and operating income of $1.1 billion, an 80% increase. Comparable sales for the year also rose 3%.
Looking ahead, Gap forecasts 1%-2% sales growth and an 8%-10% rise in operating income for fiscal 2025. Q1 2025 sales are expected to be flat or slightly up compared to the previous year. Barclays analysts noted the guidance appears "conservative and beatable," while Bank of America remained cautious on margin improvements, maintaining a Neutral rating and trimming its price target to $25 from $28.
Gap ended the year with $2.6 billion in cash, a 38% increase from the prior year, and repurchased 3 million shares for $75 million in Q4. The company also approved a $0.165 per share dividend for Q1 2025, reflecting a 10% hike.
With strong earnings, a solid cash position, and optimistic forecasts, Gap remains a top retail stock to watch as it shifts from stabilizing operations to long-term growth.