About six months into his top job at Gap (GPS), Richard Dixon knows he's settled in and ready to take on the challenge of reinventing the mall-based retailer. I noticed.
“We have some really great demonstrations of early signs of brand revitalization, and the hard work we have put into better operational, operational and financial rigor is reflected in the numbers.” Dixon told Yahoo Finance by phone. The announcement came Thursday after Gap reported fourth-quarter profits that far exceeded expectations.
After a lengthy search, Gap has appointed the former Mattel (MAT) COO as CEO, effective August 2023. Mr. Dixon, who was on Gap's board of directors prior to his appointment, was one of the Mattel executives behind Barbie's resurgence and helped bring the doll to the big screen. It will be released in theaters in 2023.
Since taking over, Dixon has continued to travel, meeting with the retailer's top decision-makers and visiting distribution centers and stores. The group diagnosed long-standing problems that had plagued the company's performance and stock price: an ugly website, less-than-cool products, and supply chain inefficiencies. Shares rose more than 4% in Friday trading.
While Gap's overall holiday quarter results showed signs of improvement (particularly in Old Navy's sales trends and Gap's margins), Dixon and his largely new management team have a lot of work to do. It shows that there are many.
“This is not a portfolio with challenges that happened overnight, and we're not going to change that overnight,” Dixon said. “But we're starting to see where new leadership and priorities are starting to emerge.”
Gap's fiscal year-end performance is as follows:
Revenue summary
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Net sales: +1% YoY to $4.3 billion, expected $4.21 billion
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Comparable sales:
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Old Navy: +2% (-7% last year), forecast +2.75%
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Banana Republic: -4% (vs. -3% last year) Forecast -4.16%
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gap: +4% -4% vs. previous year, forecast +1.2%
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Athleta: -10%, last year -5%, forecast -10.9%
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Gross profit margin: 38.9% vs. 33.6% last year, 35.9% expected.
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Diluted EPS: Estimate of $0.49 vs. $0.23
What else caught our attention?
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Do not wear extra clothing: Inventory levels decreased by 16% compared to the previous year.
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guidance:
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1Q24 Net Sales: Almost unchanged year-on-year at $3.3 billion, forecast at $3.27 billion
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Gross profit for Q1 2024: Approximately 38.2% compared to 37.2% a year ago
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Net sales in 2025: 14.9 billion dollars, almost unchanged from the previous year, compared to the forecast of 14.88 billion dollars.
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Gross profit margin in 2025: Approximately 39.3% vs. 38.8% a year ago
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jeffries analyst Corey Tarlow About the quarter: “While Gap and Old Navy continued to improve, Banana Republic and Athleta had negative results. Importantly, Gap and Old Navy accounted for approximately 77% of the company's revenues in the fourth quarter and continued to account for some Management believes Banana Republic is doing well, as it has gained significant market share in its category.”While Athleta is undergoing a reset, challenges remain to its turnaround story. However, we are still watching the Gap turnaround story in its early stages and remain on the sidelines.”
Brian Sozzi I'm the executive editor of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi And even more linkedin. Have a tip about a deal, merger, activist situation, or more? Email [email protected].
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