Gap Inc (NYSE: GPS) announced its quarterly earnings after markets closed on Thursday, August 22. The retailer reported better-than-expected earnings in the second quarter.
Revenue and comparable-store sales, however, fell short of what analysts on Wall Street had forecast. The company blamed the decline on tough macros as all its brands posted negative revenue growth on a year-on-year basis. Gap also revised its diluted earnings per share outlook for fiscal year 2019 and retaliated its adjusted diluted earnings guidance.
Shares of Gap dropped 7% in the after-hour trading session on the news, but later recouping some losses. Prior to the earnings report the stock had gained more than 30% so far this year and nearly 45% in the past 12 months.
GPS Earnings & Outlook
Gap had net income of $168 million, or $0.44 per share, in the three months ended August 3. That compares to net income of $297 million, or $0.76 per share the company reported in the same period last year.
Excluding one-time costs and gains, earnings came to $0.63 per share during the quarter. Analysts had predicted adjusted earnings $0.53 per share, according to data compiled by Refinitiv.
Companywide revenue stood at $4 billion, compared with $4.09 billion in the prior-year period. Wall Street had called for revenue of $4.02 billion according to Refinitiv. Comparable-store sales fell 4% during the quarter, versus a 2% increase same period last year.
Looking ahead, the company expects to post earnings of between $2.05 to $2.15 per share for the full year. Analysts are guiding for full-year earnings of $2.06 per share according to Refinitiv. Management is still expecting comparable sales for fiscal year 2019 to be down low single digits.
Gap CEO Comments
We are operating in a challenging environment, but I remain confident in the strength of our brands and our plans for the future as we work to launch two independent, public companies,” said Art Peck, president and chief executive officer, Gap Inc.
“Heading into the second half of the year, we remain highly focused on inventory and expense discipline to improve results, as well as delivering exceptional product supported by powerful marketing to drive customer engagement,” Peck added.
Gap Inc Profile
Gap is a global apparel and accessories retailer for men, women, and children operating under the brand names of Gap, Banana Republic, Old Navy, Athleta, Intermix and Janie & Jack.
Distribution channels include about 3,300 specialty and outlet stores, online, and franchises. About 80% of revenue is generated in the United States, and just under 80% of revenue comes from the Gap and Old Navy brands. – Warrior Trading News
