The Gap, Inc. (NYSE: GPS)
On Thursday April 7th, 2016, The Gap Stores reported their most recent earnings report. The company, which operates under the labels Old Navy, Banana Republic, and Gap, and serves the customer needs in over 90 countries worldwide, reported that their earnings were dismal and well below analysts expectations. The company is a retailer of clothing and accessories for the younger and middle-aged generation.
All three of these sectors within the company saw sales metrics fall by a much higher margin than they expected. Total sales fell to 1.43 billion dollars in just a 5 week period which is 6.5% lower than the previous year. And to add insult to injury, the company reported that they are beginning the month of April 2016 with a much higher inventory level that they feel comfortable with.
The Price Action
During the regular trading session shares were lower from early on – which closed at $27.68 – down $1.18 or 4.09%. However, after the earnings were announced and the market closed, shares were much lower to the tune of -8.74% lower. Shares at the after hours close at 8 pm session were at $25.26 ,- $2.42 lower than the 4 p.m. close of regular trading.
While I’m sure the company has many things that they are considering to offer up as excuses, and comments they could have added, in their conference call, this is what their CFO offered up-
“While March proved challenging, we remain focused on taking the necessary steps to improve results across the portfolio throughout the year,” said Sabrina Simmons, chief financial officer, Gap Inc.-BusinessWire
In the price chart we can see The Gap’s price action going back a full year to March of 2015. You will note two Red elliptical areas, the one of the left being old support, the one on the right being new resistance. You will also see a yellow elliptical circle with a yellow arrow next to it- this is where shares will likely open in the morning on Friday with the subsequent earnings release and after hours heavy selling pressure. Many eyes of traders and investors will be watching this one Keenly when shares begin trading in the morning. We will do a follow-up on this one in the near future.
The Gap, Inc. operates as an apparel retail company worldwide. It offers apparel, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Athleta, and Intermix brands. The company provides apparel, eyewear, jewelry, shoes, handbags, and fragrances; and performance and lifestyle apparel for use in yoga, strength training, and running, as well as seasonal sports, including skiing and tennis. The Gap, Inc. offers its products through company-operated stores, franchise stores, Websites, e-commerce and social media sites, and catalogs. The company has franchise agreements with unaffiliated franchisees to operate Gap, Banana Republic, and Old Navy stores in Asia, Australia, Europe, Latin America, the Middle East, and Africa. As of January 30, 2016, it operated, 3,721 company-operated and franchise store locations. The company was founded in 1969 and is headquartered in San Francisco, California.-YahooFinance