Gap Inc. Shares Surged After Company Reported Positive Fourth-Quarter Earnings
Mar 4, 2022 By MarketDepth
Gap Inc. (NYSE: GAP) shares surged during after-hours on Thursday after the company reported positive fourth-quarter earnings, despite rising inflation and supply chain issues. According to Gap CEO Sonia Syngal, the retailer experienced near-term disruptions throughout the fourth quarter, which “muted” its performance. Nevertheless, the retailer, which owns the Banana Republic and Old Navy brands, says that it expects shipping issues to ease soon.
Lower than Expected Loss
The global clothing and accessories retailer reported an earnings loss of USD0.02 per share, compared to the expected loss of USD0.14 a share. Revenue amounted to USD4.53 Billion, higher than analysts anticipated USD4.49 Billion. Meanwhile, same store sales rose 3% throughout the year, under the 3.7% increase that analysts were hoping for.
“After two years of restructuring, including divesting smaller non-strategic brands, transitioning our European market to an asset-light partnership model and shedding underperforming North American stores, our core business is strong and we are poised for balanced growth across our four billion-dollar lifestyle brands. As our teams address near-term disruption from the acute headwinds that muted our fourth quarter performance, we are confident in our ability to execute against our long-term strategy, capitalizing on our investments in demand-generation, customer loyalty and artificial intelligence to accelerate profitable growth.”Sonia Syngal, CEO, Gap Inc.
According to Street Account, the company’s gross margins totaled 33.7% within the period, under analysts estimates of 35.2%. The retailer revealed that the results were affected by higher air freight costs, which were somewhat relieved by the increased sales of hoodies and denim at full price.
“In order to meet demand, we utilize significant air freight to deliver as much of holiday product as we could. As a result, sales were muted and profits pressured. While Q1 will have moderate product delays that necessitated air freight as a result of the aforementioned actions, our summer and go-forward deliveries are expected to be more on time and require only modest more normalized air.”Syngal told investors on a conference call late Thursday