Gap (GPS)’s third-quarter 2021 earnings missed expectations, lowered forecasts

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On August 18, 2020, in San Francisco, California, a pedestrian walks past the closed GAP flagship store.

Justin Sullivan | Getty Images

Gap Inc.’s stock price plummeted on Tuesday after the company lowered its full-year outlook, and its third-quarter performance fell short of expectations because the closure of Covid-related factories caused serious delays in products this quarter.

Affected by the news, its stock price has recently fallen 10% in an extended transaction.

CEO Sonia Syngal said in a press release: “Although we are entering the third quarter with a growing momentum, severe supply chain headwinds have affected our ability to fully meet strong customer demand.”

Gap said it has invested in air freight to help ease some of the port congestion challenges during the holiday period. But this also means that the increased costs will put pressure on profits in the short term.

The following is Gap’s performance during the three-month period ending October 30 compared to analysts’ expectations using Refinitiv data:

  • Earnings per share: adjusted to 27 cents, expected to be 50 cents
  • Revenue: 3.94 billion U.S. dollars, expected to be 4.44 billion U.S. dollars

Gap said that from a year ago, a net income of $95 million or 25 cents per share was converted to a net loss of $152 million, or 40 cents per share.

According to data from Refinitiv, excluding items, its earnings per share were 27 cents, which is lower than the 50 cents analysts have been looking for.

Revenue fell slightly from 3.99 billion US dollars a year ago to 3.94 billion US dollars. This was lower than the expected USD 4.44 billion.

Gap now expects annual revenue to grow by approximately 20%, which is lower than its previous forecast of approximately 30% growth. Analysts surveyed by Refinitiv have been expecting a year-on-year growth of 28.4%.

Gap’s adjusted full-year earnings forecast has been lowered from US$2.10 to US$2.25 per share to US$1.25 to US$1.40 per share. Refinitiv said that analysts had expected Gap’s earnings per share to be $2.20.

Gap said that its revised outlook takes into account the loss of sales of approximately US$550 million to US$650 million this year due to supply chain restrictions and approximately US$450 million in air freight costs.

Find the full earnings report published by Gap here.

This story is developing. Please check for updates.


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