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The San Francisco-based company’s shares rose about 2% after the closing bell as fourth-quarter profit beat Wall Street expectations.
Demand for Gap jeans and Banana Republic’s floral shirts have declined due to coronavirus-led restrictions, but affordable clothing at Old Navy and comfortable womenswear at Athleta have became stay-at-home favorites.
At Old Navy, sales rose 5% in the fourth quarter and at Athleta, they surged 29%.
The company now plans to open 30 to 40 Old Navy stores and 20 to 30 Athleta stores and close about 100 Gap and Banana Republic stores globally in fiscal 2021.
As online sales surge, Gap spent $140 million to beef up its network of distribution centers.
The company expects the first half of 2021 to continue to be impacted by the pandemic and to return to a more normalized, pre-pandemic sales level in the back half of the year.
Fiscal year 2021 net sales is expected to reflect mid- to high-teens growth, and Gap forecast earnings to be in the range of $1.20 per share to $1.35 per share.
On a per share basis, Gap earned 28 cents per share, 10 cents more than expectations, according to IBES data from Refinitiv.
However, net sales fell about 5% to $4.42 billion in the fourth quarter, missing estimates of $4.66 billion, hurt by weakness at its namesake brand and Banana Republic.
