San Fransciso -- Gap credited rising sales abroad, online and at its Banana Republic and Old Navy chains for helping to boost its fourth-quarter net income rise 3.7%, beating analysts expectations. However, the chain issued an annual profit forecast that fell short of expectations, saying its operating profits would be squeezed as it grapples with soaring costs of cotton and other raw materials.
Gap also announced that it plans to buy back $2 billion in shares, on top of recent repurchases totaling $2.6 billion.
The retailer reported quarterly net income of $365 million, compared with $352 million. Revenue rose 3% to $4.36 billion. Overall same-store sales were flat.
In the company's struggling namesake Gap division in North America, same-store sales fell 2%. The figure has been falling on an annual basis for the brand since 2005.
Same-store sales rose 1% at Banana Republic's and Old Navy's domestic divisions.
Chairman and CEO Glenn Murphy said during a conference call with investors Thursday that all three brands need to improve in North America.
The company has been expanding globally, adding its first stores in China and Italy last year and it now sells its merchandise online in more than 90 countries. It also is continuing to remodel Old Navy stores with the goal of having nearly 400 in a new format by year's end.
The company plans to open about 50 company-owned stores abroad, including units in China and Italy. On the domestic front, Gap's plans include adding eight to 10 Athleta stores in North America by the end of the year.
The company said it earned $1.2 billion overall for the full year, compared with $1.1 billion the year before.