Gap stock jumps 15% despite muted outlook for holiday quarter

November 16, 2023 02:37 PM PST | By Invezz

Gap stock jumps 15% despite muted outlook for holiday quarter — Image source: Invezz

Gap stock is not much bothered by Q4 guidance

The price action is interesting considering the apparel retailer issued a somewhat downbeat guidance for its holiday quarter as it continues to struggle with a slowdown at Athleta and Banana Republic.

Gap expects sales to remain flat or even slide a bit in its fourth financial quarter. Analysts, in comparison, had called for a 0.3% increase instead.

The New York-listed firm did, however, reiterate its outlook for the full year on Thursday. Gap stock is now up more than 100% versus its year-to-date low in late May.

Watch here: https://www.youtube.com/embed/kOk5gDcdx_Q?feature=oembed

Gap third quarter financial highlights

Earned $218 million versus the year-ago $282 million
Per-share earnings also declined from 77 cents to 58 cents
Adjusted EPS printed at 59 cents as per the press release
Sales went down 7.0% year-over-year to $3.77 billion
Consensus was 19 cents a share on $3.60 billion revenue

Gap saw a 2.0% hit only to its same-store sales in the recently concluded quarter – far better than down 8.7% expected.

Gap continued to improve margins in Q3

Other notable figures in the earnings report include a 390 basis points increase in gross margin on the back of fewer promotions, lower commodity costs, and commitment to cutting costs.

Experts had forecast a 150-bps improvement in gross margin instead. More importantly, Gap is confident that its gross margins will improve further moving forward.

In August, Gap named Richard Dickson its new Chief Executive. Dickson has previously served at notable names like Mattel.

The post Gap stock jumps 15% despite muted outlook for holiday quarter appeared first on Invezz

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