Gap (GAP) Q3 2024 Earnings
How Did GAP Stock React to Q3 2024 Earnings?
S&P 500 over the same 30 days: +0.98%.
Did GAP Beat Earnings? Q3 2024 Results
Yes. Gap reported Q3 2024 earnings of $0.72 a share on Nov 21, 2024, beating the $0.59 consensus estimate by 22.0%. Revenue was $3.8B against a $3.8B estimate.
Gap Inc. posted a stronger-than-expected third quarter of fiscal 2024, with GAAP diluted EPS of $0.72 beating the $0.59 consensus estimate by 22.03%, even as revenue of $3.83 billion came in fractionally below the $3.84 billion Wall Street expected, rising 1.6% year over year. The profit outperformance was largely powered by a 270 basis point expansion in operating margin to 9.3%, itself driven by a 140 basis point improvement in gross margin to 42.7% and a meaningful decline in operating expenses to $1.28 billion from $1.31 billion a year ago. All four of Gap's brand banners gained market share during the quarter, with Athleta leading the way at 5% comparable sales growth and Gap brand extending its positive comp streak to four consecutive quarters. Encouraged by what CEO Richard Dickson described as a strong start to the holiday season, the company raised its full-year outlook, now targeting net sales growth of 1.5% to 2.0% and operating income growth in the mid-to-high 60% range, up from the mid-to-high 50% range previously.
- Improved inventory management driving 90 basis point merchandise margin expansion
- Online sales growth of 7% year-over-year, representing 40% of net sales
- Market share gains across all four brands
- ROD as a percent of sales leveraged 50 basis points versus prior year
- Consistent execution of brand reinvigoration playbook
- Athleta returned to positive comparable sales with 5% comp growth
- Gap brand achieved fourth consecutive quarter of positive comparable sales
“I'm proud that Gap Inc. delivered another successful quarter, growing net sales for the 4th consecutive quarter and gaining market share across all brands while meaningfully expanding operating margin. Consistent execution of our strategic priorities, including the rigor and repetition we're applying to our brand reinvigoration playbook, is making us a stronger company and demonstrates our continued progress in unlocking Gap Inc.'s full potential.”
Gap CEO, on the earnings call
What Was Gap's Outlook in Q3 2024?
Gap Inc. raised its full-year fiscal 2024 outlook. Net sales are now expected to grow 1.5% to 2.0% on a 52-week basis (previously 'up slightly'). Gross margin expansion is now expected to be approximately 220 basis points (previously approximately 200 basis points). Operating expense is expected to be approximately $5.1 billion. Operating income growth is now expected in the mid-to-high 60% range compared to fiscal 2023 adjusted operating income of $606 million (previously mid-to-high 50% range). The effective tax rate is now expected to be approximately 26.5% (previously approximately 28%). Capital expenditures are expected to be approximately $500 million.
GAP YoY Financials
| Metric | Q3 2024 | Q3 2023 | Year over year |
|---|---|---|---|
| Revenue | $3.8B | $3.8B | +1.7% |
| Gross Profit | $1.6B | $1.6B | +5.1% |
| Operating Income | $355.0M | $250.0M | +42.0% |
| Net Income | $274.0M | $218.0M | +25.7% |
GAP Revenue by Segment
GAP Revenue by Geography
Figures from SEC filings and company reports. Not investment advice.