Gap Inc. topped Wall Street’s earnings expectations and boosted its profit forecast even as the retailer’s sales fell short of estimates, showing the challenge apparel companies face in recovering from a pandemic slump.
- The company, which also owns Old Navy and Banana Republic, said comparable sales rose 28 per cent from a year earlier, below the 58 per cent average of analysts’ estimates.
- The company sees full-year earnings of US$1.55 to US$1.70 a share, up from a prior forecast of no more than US$1.35. It sees net sales growth for fiscal 2021 to rise in the low-to-mid 20 per cent range from a year earlier -- an increase from the previous projection of growth in the mid-to-high teens.
Key insights
- Investors have been watching for signs of recovery across the apparel industry, which struggled during lockdowns earlier in the pandemic. Chief Executive Officer Sonia Syngal said in a statement that Gap had “market share gains that outpaced the industry” and saw “particular strength” in its Old Navy and Athleta brands.
- The company has accelerated its move to e-commerce since the pandemic hit. Digital sales were 82 per cent higher than in 2019. Syngal said the company saw a resurgence in summer fashion such as dresses.
Market Reaction
- The shares swung between gains and losses in postmarket trading, falling 0.9 per cent as of 4:34 p.m. in New York. The stock had climbed 74 per cent this year through Thursday’s close.
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