A pedestrian walks by the closed GAP flagship store on August 18, 2020 in San Francisco, California.
Justin Sullivan | Getty Images
Gap Inc. shares tumbled Tuesday after the company slashed its full-year outlook, with fiscal third-quarter results falling short as Covid-related factory closures led to significant product delays in the quarter.
Its stock was recently down 10% in extended trading on the news.
“While we entered the third quarter with growing momentum, acute supply chain headwinds affected our ability to fully meet strong customer demand,” said Chief Executive Sonia Syngal in a press release.
Gap said it invested in air freight to help mitigate some of the port congestion challenges over the holidays. But that also means added expenses that will weigh on profits in the near term.
Here’s how Gap did in the three-month period ended Oct. 30 compared with what analysts were anticipating, using Refinitiv data:
Earnings per share: 27 cents adjusted vs. 50 cents expectedRevenue: $3.94 billion vs. $4.44 billion expected
Gap said it swung to a net loss of $152 million, or 40 cents per share, from net income of $95 million, or 25 cents a share, a year earlier.
Excluding items, it earned 27 cents per share, short of the 50 cents that analysts had been looking for, according to Refinitiv.
Revenue fell slightly to $3.94 billion from $3.99 billion a year earlier. That missed expectations for $4.44 billion.
Gap now expects full-year revenue to be up about 20%, which is less that its prior outlook of about a 30% increase. Analysts polled by Refinitiv had been looking for a 28.4% year-over-year gain.
Gap’s expectations for adjusted full-year earnings have been lowered to a range of $1.25 to $1.40 per share, from a prior range of $2.10 to $2.25 a share. Analysts had expected Gap to earn $2.20 per share, Refinitiv said.
Gap said its revised outlook takes into account roughly $550 million to $650 million of lost sales from supply chain constraints and about $450 million in air freight costs for the year.
Find the full earnings release from Gap here.
This story is developing. Please check back for updates.
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