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Old Navy Is Picking Up Gap's Slack

Gap Inc. posted better-than-expected preliminary fourth quarter earnings, but its namesake brand is still weak.
An Old Navy storefront. Photo: Justin Sullivan

An Old Navy storefront. Photo: Justin Sullivan

Things are sort of looking up for Gap Inc. One week after new CEO Art Peck's official start date, the company has released fiscal fourth quarter earnings. 

For the fourth quarter of fiscal year 2014, Gap Inc.’s net sales increased about 3 percent to $4.71 billion, with comparable sales -- a metric that excludes the revenue boost the company gets from adding new stores to its network -- up 2 percent during that period. Old Navy contributed largely to that growth, with comp sales up 11 percent over last year, thanks to a successful holiday season. Banana Republic comp sales increased 1 percent. But Gap's flagship brand did not fare so well: comp sales were down 6 percent over last year.

The company also shared its January sales results, which were pretty dismal: Total net sales across Gap Inc. declined about 3 percent to $888 million. Comparable sales at Gap stores slid 9 percent, while Old Navy and Banana Republic's comp sales increased by 3 percent and 2 percent, respectively.

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The news comes as the Gap brand enters yet another phase of its turnaround, having just let go of creative director Rebekka Bay with no intention of replacing her.