Officials from Gap Inc. had previously announced that the clothing and accessories retailer is expecting dismal results in the third quarter. Following the announcement, analysts had lowered their estimates for sales and revenue for Gap in 2019’s Q3. As per the report released on Thursday, the retailer beat the lowered forecast on both fronts; earnings per share (EPS) and revenue in the third quarter.
Q3 Earnings Report Vs. The Analysts Forecasts
Using the data from Refinitiv’s survey, analysts predicted 51 cents of earnings per share for Gap in the third quarter. Printing 53 cents per share, the retailer narrowly beat the forecast. Analysts had also estimated $3.96 billion in revenue in the third quarter. Gap Inc., on the other hand, noted a reasonably higher $4.00 billion in revenue in Q3 of 2019. Drop in the same-store sales, however, came out to be worse than expected. While analysts had anticipated a drop of 2.3%, the report highlights the same-store sales to have fallen at the rate of 4% in 2019’s Q3.
Gap Inc. traded sideways in the stock market during the regular session on Thursday. Opening at $16.44, the stock printed a low of $15.98 on Thursday and closed the day at $16.22. In the after-hours trading following the Q3 earnings report, however, share prices were reported to have hiked (1.5%) to around $17.00. The year-to-date performance of the stock has been poor in 2019. It was reported trading at $25.75 at the start of the year. Making a yearly high of $29.51 in March, share prices have remained downbeat, dropping as low as $15.36 in August.
The 4% drop in same-store sales was primarily linked to poor sales in Gap’s Old Navy brand that saw a significant decline in the women’s apparel demand, as per the sources. Despite the worse than expected results, official from Gap highlighted that the plans of turning Old Navy into a company remain on track and will be realized somewhere in the second half of 2020. The representative further added that the Old Navy brand will be pulled out of China with the start of the next year in order to focus entirely on the segments of the North American markets that remain underserved to date.
GAP Is Looking For A New Chief Executive Officer
Gap’s CEO, Art Peck, announced resignation earlier in November and the position was filled by Fisher on a temporary basis. The retailer, however, continues to assess the internal and external candidates to find a permanent chief executive for the company.