Gap beats quarterly estimates on steady demand for formal clothing
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.