- Gap dramatically slashed its profit outlook for the year as a steep decline in Old Navy sales weighed on results for the fiscal first quarter.
- The lower-income consumer, which is Old Navy’s target customer, is starting to feel pinched by inflation, Gap Chief Executive Officer Sonia Syngal told CNBC.
- “We’re dealing with really volatile consumer signals — whether it was last year in Covid, or this year’s post-Covid behaviors,” said Syngal.
Gap swung to a net loss in the three-month period ended April 30 of $162 million, or 44 cents per share, compared with net income of $166 million, or earnings of 43 cents a share, a year earlier.
Revenue fell roughly 13% to $3.48 billion from $3.99 billion a year earlier. That came in slightly ahead of expectations for $3.46 billion.
Gap said its sales figure was hit by an estimated 5 percentage points related to the retailer lapping a year-ago lift from stimulus checks, in addition to roughly 3 percentage points from divestitures, store closures and transitioning its European business to a partnership model.
Overall, same-store sales fell 14% from the prior year, more than the 12.2% drop that analysts had been looking for. Within that figure, Gap said its online sales declined 17% and in-store sales dropped 10% versus last year.
Here’s a breakdown of same-store sales performance, by brand:
- Gap: Down 11% year over year
- Old Navy: Down 22% year over year
- Banana Republic: up 27% year over year
- Athleta: down 7%
For the fiscal year 2022, Gap now expects to earn between 30 cents and 60 cents per share, on an adjusted basis. That’s down from a prior range of 1.85 and $2.05. And well below analysts’ expectations for $1.34 per share, based on Refinitiv data.
https://www.cnbc.com/2022/05/26/gap-gps-reports-q1-2022-earnings.html
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