UPDATE: Gap Q4 Profit Beats Expectations, Shares Rise

Shares of

surged 1.8% in after-hours trading after the company reported better-than-expected earnings for the fourth quarter. The San Francisco, California-based company posted quarterly earnings of $319 million, or $0.75 per share, compared to a year-ago profit of $307 million, or $0.68 per share. Its sales gained 3% to $4.71 billion from $4.58 billion. However, analysts were expecting earnings of $0.74 per share on revenue of $4.71 billion. Its comparable sales rose 2% for the fourth quarter, versus a 1% growth last year. Total online sales rose to $792 million for the quarter, up from $698 million, in the year-ago quarter. Gap's board approved a $1 billion buyback program and raised annual dividend from $0.88 per share to $0.92 per share. Operating expenses climbed to $1.14 billion from $1.07 billion, while marketing expenses declined slightly to $178 million in the quarter. Gap ended fiscal year 2014 with $1.52 billion in cash and cash equivalents. During the fourth quarter, Gap repurchased 3.7 million shares for $148 million. "Looking ahead at 2015, we will continue executing our global growth strategy, bringing new digital capabilities to life and making the shifts necessary to consistently deliver the brand-right, emotional product that our customers expect from all of our brands," said Art Peck, chief executive officer, Gap Inc. For the full year, Gap expects a profit of $2.75 to $2.80 per share, versus analysts' estimates of $3.00 per share. That included a negative impact of around $0.16 from foreign currency fluctuations and around $0.13 due to delayed merchandise receipts at West Coast ports. Gap shares gained 1.83% to $41.11 in after-hours trading.