Gap cuts profit outlook for the year amid dent in Old Navy business
• The company now expects to earn between 30 cents and 60 cents per share, on an adjusted basis
Gap Inc (NYSE: GPS) cut its profit outlook for the year on Thursday after reporting decline in quarterly sales due to its Old Navy business.
The company now expects to earn between 30 cents and 60 cents per share, on an adjusted basis, for the fiscal 2022, compared to the prior forecast of $1.85 and $2.05. Analysts expected earnings of $1.35 per share, according to Refinitiv.
“Our Q1 results and updated fiscal 2022 outlook primarily reflect industry-wide headwinds as well as challenges at Old Navy that are impacting our near-term performance,” said CEO Sonia Syngal.
Old Navy’s business is suffering due to the sky-touching inflation and an imbalanced mix of clothing sizes and ongoing inventory delays.
Quarterly performance
Gap’s same-store sales in the first quarter declined 14% year-over-year, higher than 12.2% decline as expected by analysts. The online sales of the company fell 17% while the in-store sales dropped 10% from the last year.
Net loss in the quarter ended April was $162 million, or 44 cents per share, compared with net income of $166 million, or earnings of 43 cents a share, a year earlier.
Revenue fell roughly 13% to $3.48 billion from $3.99 billion a year earlier.
“We are revising our fiscal 2022 outlook to reflect the impact of certain factors impacting our near-term performance, including execution challenges at Old Navy, an uncertain macro consumer environment, inflationary cost headwinds, and a slowdown in China that is impacting Gap Brand,” said Katrina O’Connell, Executive Vice President and Chief Financial Officer,
Picture Credits: Getty Images
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