Gap Inc. (GPS)share price went down on Tuesday after company third-quarter financial results were reported. The Company missed the expectations due to higher spending on marketing which offset the sales at Old Navy and Athleta. There was major declined was seen in the company’s Banana Republic brands.
CEO Sonia Syngal is spending more on advertising to clearly define each of its core brands. The company started its new advertisement campaign with recent holiday-themed commercials to attract more market share in women’s workout apparel and denim.
Gap said that it remains optimistic despite a clear outlook due to current global pandemic. The company is expecting higher sales in the fourth quarter compared to the previous year but analysts are expecting a decline of 2.8% in sales in the fourth quarter.
CFO Katrina O’Connell said that the consumers are looking to spend money because they cant spend money on entertainment and travel and people will be spending their money to buy more compelling gifts for their families over the holiday season.
The company also warned that the 2nd wave of coronavirus around the world will still negatively impact sales and traffic in stores.
After the financial result announcement company shares declined 10% in after-hours trading. The company has a market cap of $10 billion
Here’s how the retailer did during its fiscal third quarter, compared with what analysts were expecting.
The company’s earnings per share in the third quarter was $0.25 per share. The expected earning from the analysts was $0.32.
The analysts were expecting $3.82 billion in sales revenue but the company beat the estimates and reported $3.99 billion in revenue for the third quarter.
The sales also beat the estimates and went up by 5%.
The company has named a new chief to turn around its underperforming Gap and Banana Republic brands. Gap also appointed Asheesh Saksena as a chief growth officer effective from January 2021.
The company online sales boosted and it added 3.4 million new customers online. The company is expecting to earn half of the revenue from online sales by 2023. Net sales increased 15% for the Old Navy and same-store sales were up 17%. The company introduced 55% new variety for activewear under the Old Navy brand during the quarter.
Banana Republicnet sales fell 34%, and same-store sales dropped 30%. The company is trying hard to increase its sales for its Banana Republic brand by introducing more casual attire to this brand.Gap Inc. has previously said it expects to close roughly 30% of its Gap and Banana Republic stores in North America by the end of 2023.
Gap appointed William Sonoma as the
new president of Banana Republic and Sandra Stangl as new CEO of the Banana