GAP”>Gap reported holiday quarter sales below expectations on Thursday, but posted better-than-expected results for the third quarter as a result of reducing supply costs and cost-control measures, sending its shares up 11 % in extended trading.
Leading retailers like Walmart and Target have adopted a optimistic stance as the all-important shopping season approaches, with customers cutting back on spending and possible delaying holiday purchases until the very last minute.
Gap, a once-in-demand clothing manufacturer, has also suffered from customers turning to competitors like Shein and Amazon.com for newer models, which has decreased sales at all four of its key manufacturers.
According to LSEG data, the company anticipates fourth-quarter gross sales to get straight to slightly bad, down from economists ‘ predictions of a 0.33 % increase.
Sales of Banana Republic and Athleta decreased 11 % and 18 % in the third quarter, while Old Navy, the largest brand in Gap, saw a 1 % decline.
Gap’s across-the-board decline in sales is concerning, according to Deborah Weinswig, CEO of Coresight Research, adding that the business should proceed concentrating on its product-array problems rather than other revenue-boosting strategies.
While Gap also needs to get its house in order, different retailers are more innovative, according to Weinswig.
To help manage costs, the company has laid off employees and closed down subpar Gap and Banana Republic locations over the past month.
It achieved an modified profit of 59 cents per share, which was higher than projections of 19 cent, and net income of$ 3.78 billion exceeded expectations of$ 3.60 billion. This was in addition to the easing of supply chain expenses related to transport and production.
By expanding the selection of clothes available in stores, the store has also made an effort to maintain stock levels under control and increase sales, primarily at its Old Navy company.
According to CFRA Research scientist Zachary Warring,” Old Navy was a distinct success this quarter while the company’s former growth brand Athleta continued to decline.”
Gap reaffirmed that mid-single-digit online sales may fall in macroeconomic 2023.
