Hurricanes and unusually warm weather impacted sales gap However, the apparel company still posted better-than-expected ends in its fiscal third quarter, leading it to boost its full-year forecast for the third time this yr.
Gap, which owns Old Navy, Banana Republic, Athleta and its namesake company, now expects fiscal 2024 revenue to rise between 1.5% and a couple of%, in comparison with its previous forecast of “slightly increasing.” That's above the 0.4% growth LSEG analysts had expected and bodes well for the all-important holiday shopping season now underway.
The company also expects gross margins and operating income to grow greater than previously expected.
Shares rose about 13% in prolonged trading.
Here's how the nation's largest specialty apparel retailer performed in comparison with Wall Street's expectations, based on an LSEG analyst survey:
- Earnings per share: 72 cents versus 58 cents expected
- Revenue: $3.83 billion versus expected $3.81 billion
Gap's reported net income for the three-month period ended Nov. 2 was $274 million, or 72 cents per share, compared with $218 million, or 58 cents per share, a yr earlier.
Revenue rose to $3.83 billion, up about 2% from $3.78 billion a yr ago.
Across Gap's business, unseasonably warm weather affected sales by a couple of percentage point in the course of the quarter, while storms and hurricanes caused overall store sales to fall 2%, CEO Richard Dickson said in an interview with CNBC .
“We had unusual circumstances, hurricanes and storms that resulted in nearly 180 closures at the peak of the impact,” Dickson said, adding that Old Navy, Gap's largest brand by sales, was hit hardest by the storms.
Once the weather modified, “sales rebounded” and the vacation shopping season is off to a “strong start” to this point, Dickson said.
“We are looking forward to the holidays with great energy. Our teams are really focused on executing our plans. If we compare ourselves to where we were last year, our brands are in a much more distinct place than last year,” he said. “We have stronger brand identities and are more proficient in our playbook, which we talk about a lot, driving better products, better pricing, more relevance, better customer experience and great execution.”
Since taking the helm at Gap just over a yr ago, Dickson has worked to show the corporate around after years of decline. Under his leadership, the corporate has relied on nostalgic marketing and celebrity partnerships to regain cultural relevance. Sales have increased for the last 4 quarters in a row, but the corporate remains to be smaller than it was once, critics say must do more to enhance its product range and drive full-price sales.
Here's a more in-depth take a look at each brand's performance:
Old Navy: Gap said sales of its biggest brand rose 1% to $2.2 billion, while comparable sales were flat, falling wanting analysts' expected 0.9% growth, in line with StreetAccount. Old Navy's children's category was particularly affected by the hotter weather, Dickson said.
Gap: Gap's namesake banner grew 1% to $899 million in the course of the quarter, while comparable sales rose 3% – higher than Wall Street's expected 2.3% growth, in line with StreetAccount. The brand posted positive comparable sales for 4 consecutive quarters and is benefiting from higher marketing and product, the corporate said.
Banana Republic: The trendy workwear line increased sales 2% to $469 million, while comparable sales fell 1%, barely worse than StreetAccount's expected 0.8% decline. The brand worked to show around its men's business, which resulted in positive results in the course of the quarter. Overall, the corporate said it remains to be focused on “improving the fundamentals.”
Athlete: The athleisure arm of Gap's empire increased sales 4% to $290 million, while comparable sales rose 5%. The results weren’t comparable to estimates. In the identical period last yr, comparable sales at Athleta fell 19%. Under its latest CEO, former Alo Yoga boss Chris Blakeslee, the brand has managed to show things around.
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