Gap Stalls Earnings on Weak Sales
Gap released a mixed fiscal third-quarter earnings report after the markets closed on Thursday.
Gap Inc. (NYSE: GPS) released its third-quarter earnings report after the markets closed on Thursday. The company had $0.63 in earnings per share (EPS) on $3.86 billion in revenue, versus consensus estimates from Thomson Reuters that called for $0.63 in EPS on revenue of $3.90 billion. In the same period of the previous year, the retailer posted EPS of $0.80 and $3.97 billion in revenue.
Comparable sales for the third quarter were down 2%, versus a 2% decrease last year. Comparable sales by global brand for the quarter were as follows: Gap Global negative 4%, versus negative 5% last year; Banana Republic Global negative 12%, versus flat last year; and Old Navy Global positive 4%, versus positive 1%.
The company noted that the translation of foreign currencies into U.S. dollars negatively affected net sales in the quarter by about $100 million, primarily due to the weakening Japanese yen and Canadian dollar.
Gap updated its EPS guidance for the full fiscal year to be in the range of $2.38 to $2.42. It also expects the operating margin to be about 10.5%. The consensus estimates are $2.50 in EPS on $16.04 billion in revenue for the full year.
Art Peck, CEO of Gap, commented on earnings:
With a challenging third quarter behind us, we are sharply focused on holiday execution across all channels. We are driving forward on our key strategies designed to fuel future growth.
Peck continued:
Old Navy delivered another consecutive quarter of growth. Gap has made clear progress on its transformation agenda and we look forward to introducing customers to the brand’s spring collection, which embodies elevated American style.
On the books, cash and cash equivalents totaled $1.04 billion at the end of the quarter, compared to $954 million in the same period from the previous year.
Shares of Gap closed Thursday down 1.2% at $25.09, with a consensus analyst price target of $29.10 and a 52-week trading range of $24.70 to $43.90. Following the release of the earnings report, shares were down an additional 3% at $24.30 in the after-hours trading session, but inactive in Friday’s premarket.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
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