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