(Reuters) – Apparel retailer Gap Inc on Thursday forecast a return to sales growth this year, as it expects sales at its Athleta brand to double in the next two years and the roll-out of COVID-19 vaccines to drive traffic at its stores.
The San Francisco-based company’s shares rose 4.4% to $25.42 in extended trading after fourth-quarter earnings beat expectations.
With consumers working and attending classes online during the pandemic, Old Navy’s affordable clothing and Athleta’s joggers, tees and shirts have become stay-at-home favorites.
Athleta’s sales surged 29% to more than a billion dollars in the fourth quarter and that is expected to reach $2 billion by 2023, Chief Executive Officer Sonia Syngal told analysts in a post-earnings conference call.
“We have never been more confident in Athleta’s path forward,” Syngal added.
Gap now plans to open 30 to 40 Old Navy stores and 20 to 30 Athleta stores in fiscal 2021, and close about 100 Gap and Banana Republic stores.
The company had started shutting stores of its namesake brand and Banana Republic even before the pandemic as their businesses were struggling due to stiff competition.
Last month, Gap made a $140 million bet to beef up its network of distribution centers as customers shift to online shopping.
Online sales surged 49% in the quarter.
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 in the fourth quarter, 10 cents more than expectations, according to IBES data from Refinitiv.
(Reporting by Nivedita Balu in Bengaluru; Editing by Amy Caren Daniel and Shounak Dasgupta)