gap

Gap stocks plunge as inflation tears demand

Shares of Gap Inc. significantly plummeted on Friday’s pre-market as the company struggled with the weak demand in the face of decades-high inflation.

The American clothing retailer plummeted 13.04% or 1.45 points to $9.67 per share. It moved negatively from the previous upturn of 4.41% or 0.47 points to $11.12 per share. Correspondingly, the decline slashed $536.18 million from the firm’s capitalization.

Gap reported a decline in fiscal first-quarter sales, mainly dragged down by its Old Navy business. The poor performance of the segment came amid the imbalanced mix of clothing sizes, ongoing inventory delays, and an uptick in price-lowering promotions.

The retailer swung to a Q1 net loss of $162.00 million or $0.44 per share. Remarkably, it weakened from an income of $166.00 million or earnings of $0.43 per share a year earlier.

Moreover, revenue skidded by 13.00% to $3.48 billion, slightly ahead of the forecasted $3.46 billion.

Overall, same-store sales declined 14.00% year-over-year, more than the 12.20% estimated. Subsequently, online sales decreased by 17.00%, and in-store sales dropped 10.00% from 2021 levels.

Meanwhile, Gap’s total inventories as of April 30 increased by 34.00% compared with the prior year.

Gap slashes full-year forecast

Gap also reduced its full-year forecast between $0.30 and $0.60 on an adjusted basis, well below the previous $1.85 to $2.05. In addition, the latest outlook is far lower than the market estimates of $1.34.

The company explained that the prospect reflected an uncertain macroeconomic environment and inflationary cost pressures.

Accordingly, the dismal guidance of Gap echoes peers in the retailing industry. The soaring prices of essentials like food pushed consumers to limit discretionary spending.

On the same day, American Eagle slashed its annual operating profit forecast after missing quarterly expectations. It eventually traded 11.56% or 1.62 points lower to $12.40 per share in the after-hours market.

Sending
User Review
0 (0 votes)

RELATED POSTS

Leave a Reply

tmn-img-28-1

Share this on

Facebook
Twitter
LinkedIn

Rec­om­mended for You