Retailer Gap Expects Strong Holiday Season Sales
Gap raised its annual sales forecast on Thursday and said the holiday season was off to a “strong start,” sending its shares up nearly 14% in extended trade.
Sales Performance
The company’s reported sales grew for a fourth consecutive quarter, and it also topped profit expectations as it executes a turnaround under CEO Richard Dickson, who took on the role in August 2023. With shoppers budgeting to purchase trendy styles, Gap’s strategy of paring back discounts and stocking fresher, popular items in its stores has helped the company appeal to a broader customer base.
Updated Sales Forecast
Gap now expects full-year net sales to rise between 1.5% and 2% compared to its earlier target of marginal growth.
Company Strategy
Dickson has emphasized returning to the company’s roots as a “pop culture brand,” creating marketing campaigns for its casual wear that focus on music and fashion, such as “Get Loose.” The company has also been able to maintain leaner inventory levels, driving costs lower. Inventory was down 2% in the reported quarter, following a 5% decrease in the preceding three-month period.
Old Navy and Athleta
Gap’s Old Navy brand has also been gaining back lost ground with fresher styles for denim and dresses appealing to customers at full price, with similar gains reflecting in Athleta, its athletic wear unit.
Financials
The company earned third-quarter profit per share of 72 US cents, compared with analysts’ estimate of 58 US cents, as per data compiled by LSEG. It raised its gross margin expansion target for the year by 20 basis points, after reporting a 140 basis point increase in gross margin for the quarter that ended November 2.
Conclusion
Gap’s strong sales performance and updated sales forecast demonstrate the company’s successful turnaround efforts under CEO Richard Dickson. The company’s focus on appealing to a broader customer base through fresher inventory and marketing campaigns has driven growth and profits.
FAQs
Q: What was Gap’s sales performance like in the quarter?
Gap reported sales growth for a fourth consecutive quarter and topped profit expectations.
Q: How did Gap’s inventory levels perform in the quarter?
Gap’s inventory was down 2% in the reported quarter, following a 5% decrease in the preceding three-month period.
Q: What was Gap’s profit per share in the third quarter?
Gap earned third-quarter profit per share of 72 US cents, compared with analysts’ estimate of 58 US cents.
