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Mediocre Q3 earnings for Gap

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Miguel A. Rodriguez
Miguel A. Rodriguez
24 November 2021
Gap slashed the full-year outlook for profits and sales

For the quarter ended October 30, Gap reported an EPS of 27 cents, lower than 50 cents expected. Revenue also came in lower-than-expected, at $3.94 billion versus $4.44 billion forecasted. The company swung to a net loss of $152 million.

According to Gap’s CFO Katrina O’Connell, backlogs at US ports had a meaningful impact into the second half of the year, resulting in three straight weeks of unanticipated delays of Gap’s fall products. The disruption is said to last until early next year.

One of Gap’s businesses, Old Navy, was disproportionately impacted by supply chain delays, especially the women’s section. Old-navy’s same-store sales fell 9% year over year.

For Q4, Gap expects the inventories to be up high-single digits year over year after the last quarter’s 1% decline. The full-year revenue is seen 20% higher, which is less than its previous outlook of 30% increase. Moreover, Gap bets that a tie-up with Kanye West’s Yeezy line will boost sales and attract new customers.

At the moment of writing, Gap stock price was down almost 22%, whipping out the stock’s 16% gain for the year.

Sources: cnbc.com, finance.yahoo.com, thestreet.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.