Gap beats quarterly estimates on steady demand for formal clothing

Gap beats quarterly estimates on steady demand for formal clothing




Gap Inc

People are preferring more formal clothing, dresses, woven tops and pants, shelving casual wear like t-shirts and shorts as they return to travel, work and social occasions after two years of pandemic-induced restrictions.

Gap’s Banana RepublicOld Navy

However, Gap echoed retailer Kohl’s

It expects fourth-quarter net sales to be down in mid-single digits, compared with analysts’ expectations of a 0.6% decline, according to Refinitiv IBES data.

“We did see strong volume in October slow a bit in the end and a little bit of a slow start to November,” finance chief Katrina O’Connell said on a post-earnings call.

Gap is expected to continue to struggle over the next 12 months because of its low- to middle-income consumer base and underperforming brands, Zachary Warring, equity analyst at CFRA Research said.

Heading into the holiday season and 2023, discounts could continue for brands like Gap due to a weaker consumer, he added.

The company reported $53 million in impairment charges related to YeezyKanye West

Gap’s third-quarter net sales rose 2.5% to $4.04 billion, topping analysts’ estimates of $3.80 billion. Excluding items, it booked a profit of 38 cents per share, compared with expectations of a break-even.

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