Gap Inc. (NYSE: GPS) said on Tuesday that its financial performance was weaker than expected in the fiscal third quarter due to the ongoing Coronavirus pandemic. The increase in new COVID-19 cases in recent weeks, the retailer added, could hurt store traffic in the fourth quarter as well. The novel flu-like virus has so far infected a little under 13 million people in the United States and caused over a quarter million deaths.
Gap shares tanked more than 10% in extended trading on Tuesday. The U.S. retailer now has a per-share price of £17.84, that represents a close to 40% gain year to date in the stock market. Gap had tumbled to as low as £4.12 per share in the first week of April, when the pandemic pushed its stores into temporarily shutting down.
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Gap’s Q3 financial results versus analysts’ estimates
Gap valued its net earnings at £71.20 million in the third quarter that translates to 18.74 pence per share. In the comparable quarter of last year, it had earned a higher £104.93 million, or 27.73 pence per share.
The clothing and accessories retailer generated £2.99 billion of net sales in the recent quarter. Gap’s digital sales jumped 61% in Q3, but store sales saw a 20% decline. E-commerce sales, as per the American company, made up 40% of its total quarterly sales.
According to FactSet, experts had forecast the company to print £2.86 billion of sales in the third quarter. Their estimate for per-share GAAP earnings stood at 20.24 pence. In the prior quarter (Q2), Gap had posted an 18% year over year decline in net sales, as per the report published in August.
Gap’s guidance for the fiscal fourth quarter
As of the end of the third quarter, GAP had £1.95 billion of cash and equivalents. In fiscal Q4, the San Francisco-based company expects slightly higher sales than last year’s £3.52 billion. It, however, refrained from giving its guidance for the full year due to COVID-19 uncertainties.
GAP also announced Sandra Stangl as the new CEO and president of Banana Republic on Tuesday. The retailer created a new position of Chief Growth Officer that it said will be filled by Asheesh Saksena.
Gap performed largely downbeat in the stock market last year with an annual decline of roughly 30%. At the time of writing, it has a market capitalisation of £7.53 billion.
