BS: Gap Inc (GPS) Stock Slumps On Poor Earnings Forecasts
Gap Inc. (NYSE:GPS) shares plummeted 1.61% to $24.68 in after-hours trade on Thursday, as the retailer announced its disappointing third-quarter earnings and poor full year guidance. As compared to the analysts’ prediction, the results were in-line.
The corporation reported earnings per share (EPS) of $0.63 per share, matching the analysts’ forecast of $0.63 a share. The entity reported net income of $248 million, lower than $351 million it earned same quarter last year.
It posted the net sales of $3.86 billion was also in-line with analysts’ forecast, though this figure is down from $3.97 billion a year ago.
Of its namesake brand, same-store sales were 4% negative in contrast with 5% negative a year ago. Comparable store sales at Banana Republic were down 12% versus flat last year, while comps at Old Navy brand surged 4% versus 1% gain previous year. Overall Gap’s comparable sales plunged 2%, as compared to 2% decrease last year.
Earlier this month when the company reported sales figures last week, it narrated that its sales have fallen 3% due to weakness in Canadian Dollar and Japanese Yen.
In the earnings call CEO Art Peck stated, “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.”
According to the retailer, Old Navy delivered another straight quarter for growth as the brand continued to leverage the power of its more responsive product operating model. During this quarter, Old Navy introduced seven company-operated stores in Mexico as a part of brand’s global growth strategy.
In the earnings release, the business has chopped fourth-quarter estimates. It now predicts adjusted EPS to come within the range $2.38-2.42 a share, lower from the previous profit guidance of $2.75-2.80 per share.
The retailer forecasts inventory dollars per store to be nearly flat as compared to fall of 6% last year.
Year-to-date, Gap shares tumbled more than 40%. Its stock traded at $25.08, down 1.24% as of Thursday, November 19.
