Gap Inc. (NYSE: GPS) shares plunged more than 17 percent on Wednesday morning after the San Francisco, California-based clothing and accessories retailer announced lower-than-expected profit for the third quarter.
The company said that it earned 25 cents per share for the three months ended October 31, missing analysts’ average estimate of 32 cents per share. Revenue for the quarter came in at $3.99 billion, almost flat as compared to last year. On the other hand, analysts were expecting Gap to post revenue of $3.82 billion.
Speaking on the quarterly results, CEO Sonia Syngal said in a statement “with our teams focused on sales growth and returning to profitability, we’ve made investments in demand generation that are driving engagement, particularly in this dislocated market as customers are looking to trusted brands to provide easy and safe shopping options.”
Same-store sales in the quarter increased 5 percent on a year-over-year basis, contrary to the consensus forecast for a 0.3 percent drop. On the bright side, e-commerce revenue jumped 61 percent, Old Navy sales rose 17 percent, while Athleta sales climbed 37 percent in the quarter.
On the other hand, comparable sales at Gap brand slipped 5 percent, while Banana Republic sales plummeted 30 percent.
Inventories level rose 1 percent in the third quarter, versus the comparable period last year.
Gap Inc. stock is trading on a heavy volume of 17 million shares, as compared to the daily average volume of 9.52 million shares. Today’s drop marks the steepest decline since March. GPS stock has seen many ups and downs in 2020, mainly due to the pandemic. Overall, its share price has increased nearly 25 percent on a year-to-date basis. The company’s market value stands around $8.391 billion.
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