Gap Lowers FY Outlook; Shares Tank 15%
Shares of Gap, Inc. (GPS) slipped nearly 15% in extended trading session on Thursday after the company posted a loss for the first-quarter and lowered its outlook for the full year.
First-quarter net loss was $162 million or $0.44 per share, compared to net income of $166 million or $0.43 per share last year.
Net sales for the first quarter dropped 13% to $3.48 billion from $3.99 billion last year.
Analysts polled by Thomson Reuters expected a loss of $0.13 per share on revenues of $3.46 billion for the quarter.
Comparable sales were down 14% year-over-year, while online sales declined 17% compared to last year and represented 39% of total net sales.
“Our Q1 results and updated fiscal 2022 outlook primarily reflect industry-wide headwinds as well as challenges at Old Navy that are impacting our near-term performance. While we are disappointed to deliver results below expectations, we are confident in our ability to navigate the headwinds and re-stabilize the Old Navy business in order to deliver continued progress on our long-term strategy,” said Sonia Syngal, CEO, Gap Inc.
Looking forward to fiscal year 2022, the company now expects earnings of $0.40 to $0.70 per share, adjusted earnings of $0.30 to $0.60 per share and revenue to decline in the low to mid-single digit range.
“We are revising our fiscal 2022 outlook to reflect the impact of certain factors impacting our near-term performance, including execution challenges at Old Navy, an uncertain macro consumer environment, inflationary cost headwinds, and a slowdown in China that is impacting Gap Brand,” said CFO Katrina O’Connell.
Previously, the company expected earnings of $1.95 to $2.15 per share, adjusted earnings of $1.85 to $2.05 per share and revenues growth to be in the low single-digit range.
Analysts currently estimate earnings of $1.34 per share and revenue to decline 2.30%.
GPS closed Thursday’s trading at $11.12, up $0.47 or 4.41%, on the NYSE. The stock, however, slipped $1.63 or 14.66% in the after-hours trading.
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