Did your favorite retailer go out of business? Gap's chief executive would like you to think about shopping at its stores, please and thank you.
On a call with analysts and investors on Thursday, Gap CEO Art Peck noted that some of its previous competitors have gone belly up and the company is in a position to benefit from the thinning of the crowd.
"When the lights go off and the windows get boarded over, that is market share that is made available to the rest of the industry," said Peck. "She isn't stopping shopping, she's just shopping somewhere else."
Gap, which owns names like Gap, Old Navy and Banana Republic and is trying to come out of a serious sales slump, would like to be that somewhere else.
Many retailers, like American Apparel and Wet Seal, have been unable to make it in a tough retail environment as competition from online and discount stores heats up and foot traffic at malls dwindles. They've declared bankruptcy and shuttered their stores. Other large companies like Macy's and Sears are quickly reducing their physical footprint.
"If you read the headlines you see references to retail as dead, dying and sick. We are none of those things," said Peck.
Gap said on Thursday that it doesn't think it's in for another year of declining sales. In 2017, Gap expects that sales at existing stores will be "flat to up slightly," which would reverse several years of declines. Same-store sales fell 2% in 2016 and 4% in 2015.
Gap, which previously announced its fourth quarter results, confirmed that sales and profits rose during the holiday quarter. “We’re pleased to finish the year strong, with positive comp and sales growth during the critical holiday quarter," said Peck in prepared remarks.
Shares of Gap, which are up 6% this year, added another 2% to $24.55 in after-hours trading.
During the quarter, Old Navy's sales ticked up 1%, Gap's sales were flat and Banana Republic's sales sunk 7%. The head of Banana Republic, Andi Owen, is set to leave the company at the end of this month. Peck plans to preside over the brand while the company searches for a replacement.
Overall, net income rose to $220 million, or 55 cents per share, from $214 million, or 53 cents per share, a year earlier. Excluding certain items, earnings came in at 51 cents per share, in line with estimates from Wall Street analysts.
Sales edged up 1% to $4.43 billion, beating analyst estimates of $4.39 billion. Same-store sales rose 2%, whereas in the same period a year earlier they fell 7%.
In 2017, earnings are projected to rise to $1.95 or $2.05 per share. That's up from $1.69 per share in the previous year but below the $2.07 that Wall Street analysts were looking for.
