Gap shares crater 9% after retailer sees millions in lost sales from delayed product shipments, cuts forecast

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  • Gap Inc slashed its full-year outlook as fiscal third-quarter results plummeted as Covid-related factory closures caused significant product delays in the quarter.
  • Gap said it invested in air freight to help ease some of the challenges of port congestion during the holidays. But it also means additional expenses that will impact profits in the near term.
  • Its revised outlook takes into account approximately $550 million to $650 million of lost sales from supply chain constraints and approximately $450 million in air freight costs for the year.

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Shares of Gap Inc fell on Tuesday after the company lowered its full-year outlook, eroding fiscal third-quarter results as Covid-related factory closures caused significant product delays in the quarter.

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Its stock was recently down 10% in extended trading on the news.

“As we entered the third quarter with increasing momentum, rapid supply chain headwinds impacted our ability to fully meet strong customer demand,” Chief Executive Sonia Singhal said in a press release.

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Gap said it invested in air freight to help ease some of the challenges of port congestion during the holidays. But it also means additional expenses that will impact profits in the near term.

Here’s how Gap fared compared to analysts’ estimates for the three-month period ended October 30, using Refinitiv data:

  • Earnings per share: 27 cents adjusted versus 50 cents expected
  • Revenue: $3.94 billion versus $4.44 billion expected

Gap said it grew a net loss of $152 million, or 40 cents per share, from net income of $95 million, or 25 cents per share, a year ago.

Excluding commodities, it earned 27 cents per share, according to Refinitiv, which was less than the 50 cents analysts were looking for.

Revenue fell slightly to $3.94 billion from $3.99 billion a year ago. It missed expectations by $4.44 billion.

Gap now expects full-year revenue to grow approximately 20%, which is well below its prior outlook of approximately 30% growth. Analysts surveyed by Refinitiv were looking for a 28.4% year-over-year gain.

Gap’s expectations for adjusted full-year earnings have been reduced to a range of $1.25 to $1.40 per share, up from the prior range of $2.10 to $2.25 per share. Refinitiv said analysts expected Gap to earn $2.20 per share.

Gap said its revised outlook takes into account approximately $550 million to $650 million of lost sales from supply chain constraints and about $450 million in air freight costs for the year.

Gap. find full earnings from Here,

This story is developing. Please check back for updates.

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