Gap Inc. late Thursday reported mixed second-quarter results, with sales that were slightly below Wall Street expectations and guidance that was also weaker, but the stock ticked higher after wavering between gains and losses earlier.
Gap
GPS,
is seeing “encouraging signs of progress” as it streamlines its business to focus on growth, Chief Executive Richard Dickson said.
Dickson, a former Mattel Inc.
MAT,
executive, took the Gap reins in July.
“Clothing is a rational need while fashion is an emotional one. Our brands will balance both. Going forward, I’m confident that we have the scale, talent and determination to spark huge defining trends again,” he said in a call following results. Gap stock lost some steam as the call progressed.
Restructuring is difficult, but Gap will do it “differently, with a clear focus on brand revitalization,” he said.
Gap earned $117 million in the quarter, or 32 cents a share, swinging from a loss of $49 million, or 13 cents a share, in the year-ago period. Adjusted for one-time items, the company earned 34 cents a share.
Sales fell 8% to $3.55 billion, with headwinds from a stronger dollar and the negative impact of Gap China, the retailer said. Comparable-store sales were down 6%.
Sales at Old Navy were off 6%, as Gap’s least-expensive brand continued to see “slower demand from the lower-income consumer,” the company said.
Analysts polled by FactSet expected the retailer to post an adjusted profit of 9 cents a share on sales of $3.58 billion.
Gap estimated that third-quarter net sales could drop to the low-double-digit range compared with last year’s net sales of $4.04 billion.
Gap China was sold to Baozun Inc.
BZUN,
in January, and third-quarter 2022 net sales included about $70 million in sales for Gap China, the retailer said.
FactSet consensus calls for sales of $3.77 billion in the third quarter, which would be lower than the $4 billion in the third quarter of 2022.
The retailer said that fiscal 2023 net sales could fall in the mid-single-digit range
compared with last year’s net sales of $15.6 billion. FactSet analysts expect sales of $15 billion for the year.
Gap stock has lost 15% in the year to date, contrasting with gains of about 14% for the S&P 500 index
SPX.
Read the full article here
