Gap Inc. Shares Tumble After The Company Lowered Its Full-Year Outlook
Nov 24, 2021 By MarketDepth
Gap Inc. (NYSE: GPS) shares fell Tuesday after the company lowered its full-year outlook amid disappointing fiscal third quarter results. The negative results come as a result of factory closures and subsequent shipping delays within the quarter. The stock tumbled 16% during extended trading upon the news.
Revenue Lower Than Expected
The retailers reported earnings of USD0.27 per share, in comparison to the expected USD0.50 a share. Revenue amounted to USD3.94 Billion, lower than analysts anticipated USD4.44 Billion.
“While we entered the third quarter with growing momentum, acute supply chain headwinds affected our ability to fully meet strong customer demand. Still, we made an intentional investment in building enduring customer loyalty with accelerated use of air freight to serve them this holiday, choosing long-term growth opportunity over near-term impact to profitability.”CEO Sonia Synga
Gap inventory fell 1% in the third quarter compared to the same period last year, and were level versus 2019. However, it believes that fourth-quarter inventories will rise high-single digits year over year.
“We think efforts to normalize inventory and supply chain will likely last into 2022. Coupled with Gap lapping tough comparisons in 2022, including US stimulus, child tax credits, and pent-up demand for the reopening make it difficult to have high conviction on where 2022 will shake out, let alone 2023.”Credit Suisse analyst Michael Binetti