Feb 26, 5:12 PM EST

Gap 4th-quarter results top estimates as Old Navy sales grow; company plans $1B stock buyback

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SAN FRANCISCO (AP) -- Gap Inc. reported stronger-than-expected fourth-quarter results on Thursday as sales continued to improve for Old Navy, its largest brand.

Gap reported net income of $319 million, or 75 cents per share, on $4.71 billion in revenue.

Analysts expected a profit of 74 cents per share on $4.7 billion in revenue, according to Zacks Investment Research.

A year earlier the retailer earned $307 million, or 68 cents per share, on $4.58 billion in revenue.

The company said sales at Old Navy stores open at least a year grew 5 percent for the year, including growth of 11 percent in the fourth quarter. Sales at locations open at least a year are considered important measurements of retailer health because they strip out results from stores that recently opened or closed.

Gap had reported strong sales in November and December, particularly for Old Navy. This month the company said its sales slipped in January, but it still raised its forecasts. Gap's fiscal fourth quarter ended on Jan. 31.

Gap expects a profit of $2.75 to $2.80 per share in the current fiscal year. Based on current exchange rates the company said the dollar will reduce its net income by 16 cents per share, and it will take a hit of 13 cents per share from a labor dispute that led to a slowdown in unloading cargo on West Coast.

FactSet says analysts are forecasting net income of $3.02 per share this year, on average.

The company also said it approved a $1 billion stock buyback and a 1 cent increase in its quarterly dividend, to 23 cents. Gap approved the repurchase of $500 million in stock in October and bought back $148 million in stock during the fourth quarter.

The San Francisco company owns 3,300 stores worldwide and franchises another 400 locations.

Gap shares rose $1.15, or 2.9 percent, to $41.52 in after-hours trading. For the year to date, they have fallen about 4 percent in 2015, while the Standard & Poor's 500 index has risen 2.7 percent.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap ) using data from Zacks Investment Research. Access a Zacks stock report on GPS at http://www.zacks.com/ap/GPS

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