Gap expects dollar, port delays to hurt profit this year
Friday, 6 March 2015 00:00
US President Barack Obama looks for gifts for his family with salesperson Susan Panariello after stopping off at the GAP in New York, in this 11 March 2014 file photoReuters: Apparel retailer Gap Inc forecast a drop in full-year profit, citing a strong dollar, shipment delays due to disruptions at US West Coast ports and declining sales at its flagship Gap brand.
The company said it appointed a new design chief for Gap, the latest move in its efforts to revive the brand whose popularity has waned in recent years as shoppers favor fast-fashion brands such as Zara and Forever 21.
The company named Wendi Goldman as executive vice president of Gap’s product design and development team, a month after it eliminated the role of brand creative director.
Goldman has previously worked at Victoria’s Secret maker L Brands Inc as co-president.
“I made a very quick change with senior leadership ... We were not seeing the performance improvement in the (Gap) business that we needed to see,” Chief Executive Art Peck said on his first conference call as CEO of the company.
Retailers with strong international presence have also been hit by a stronger dollar.
Gap, which gets about 22% of its sales from overseas markets, said it expected a strong dollar to reduce full-year profit by about 16 cents per share.
The dollar is forecast to gain across currencies this year as the US economy gathers steam. It is expected to rise nearly 10% in 2015 after gaining 13% in 2014.
The company said it expects merchandise delays due to labor issues at West Coast ports to reduce full-year profit by about 13 cents per share. Gap said it expects to earn $2.75-$2.80 per share for the year ending January 2016, lower than the average analyst estimate of $2.81, according to Thomson Reuters I/B/E/S.
Gap reported a profit of $2.87 per share for the year ended Jan. 31.
Fourth-quarter net income rose 4% to $319 million, or 75 cents per share.
Revenue rose 2.8% to $4.71 billion. Overall comparable sales rose 2%.