Gap shares fall amid weak fourth-quarter results; analysts remain bearish By Investing.com
© Reuters. Gap shares plunge 8% on weak fourth quarter results
David Kirakosyan and Senad Karaakhmetovich
Shares of Gap (NYSE:) fell nearly 6% in premarket Friday after the company’s report, with earnings per share ($0.75) and revenue of $4.24 billion (down 6% year-on-year) were worse than the consensus forecast. ($0.47) and $4.36 billion, respectively.
Like-for-like sales are down 5% year-over-year. In-store sales fell 3% year-over-year, while online sales fell 10% to account for 41% of total net sales.
Old Navy fourth-quarter net sales fell 6% year-on-year to $2.2 billion, with like-for-like sales down 7%. Gap’s net sales fell 9% to $1.1 billion, with like-for-like sales down 4%. Banana Republic’s net sales of $578 million were down 6% year-over-year, while like-for-like sales were down 3%. Athleta’s net sales of $436 million were down 1%, while like-for-like sales were down 5%.
“While we are in a better position as we enter fiscal year 2023, we continue to take a prudent approach to planning and managing our business in light of the continuing uncertain consumer and macro environment,” said Katrina O’Connell, chief financial officer of Gap.
In Q1/23, management expects net sales to decline in the mid-digit range year-over-year. Throughout the year, the company expects net sales to decline in the low to mid-single digits compared to last year. The company expects an increase in gross profit in the first quarter and for the whole of 2023 compared to the previous year.
The company also announced that Mary Beth Lawton, President and CEO of Athleta, is leaving the business effective today.
Analysts at UBS reaffirmed their Sell recommendation on GPS stock after a “weak fourth quarter report.” They continue to see an unfavorable up/down skew.
“We remain bearish on the macroeconomic and consumer spending outlook. We believe this exacerbates the problems GPS is facing with its ongoing stock loss. in our opinion, the cost of the chain. These factors should cause GPS to undershoot the EPS Street forecast, leading to a downward revision of NTM seller ratings,” the analysts wrote.
Analysts at Morgan Stanley believe that investors were ready for yet another disappointing GAP report.
“Stocks have already been valued across a wide range of 23e results prior to the report. The limited EPS belief remains after the report and is likely to remain so until 23e as the GPS turns around and navigates the uncertain macro environment. For us, that means stocks are likely to stay in a range until new initiatives hit the income statement, which could take a while if ever successful.
