Gap’s Pandemic Pain Worse Than Expected
Gap shares tumbled in immediately after-several hours investing Thursday as the troubled retailer documented a coronavirus-related loss that was worse than predicted.
For the to start with quarter, Gap swung to a web loss of $932 million, or $2.fifty one for each share, from with a revenue of $227 million, or 60 cents a share, a calendar year ago. Web sales dropped forty three% to $2.11 billion, reflecting the short-term closure of roughly ninety% of Gap’s world-wide shop fleet amid the pandemic.
A lot more than one,five hundred of its stores have now reopened and the organization claimed it “had leveraged its omni abilities to go on to provide shopper need online by its scaled e-commerce system.”
On-line sales improved thirteen% calendar year-over-calendar year in the quarter finished May possibly 2 and by a hundred% calendar year-over-calendar year past thirty day period.
“This online momentum, enabled by new omni-abilities that have expanded the way shoppers can shop with us, leaves us nicely-positioned to fuel our brands likely ahead,” CEO Sonia Syngal claimed in a news launch.
But in the extended session, Gap shares fell five.five% to $11.forty seven. Analysts had predicted a loss of 60 cents for each share on revenue of $2.35 billion.
As Barron’s studies, “Gap is hardly the only attire retailer emotion the warmth, but the organization had been having difficulties even in advance of the pandemic.” Its shares are down extra than 31% for the calendar year even though they obtained a strengthen immediately after it scrapped its prepare to spin off its Outdated Navy brand name.
Due to the fact April, Gap has stopped paying lease at all shop locations affected by mandatory closures throughout the pandemic. Simon Property Group, the greatest mall operator in the state, has sued the organization for $69.five million in unpaid lease throughout extra than 400 qualities.
“We are in energetic and ongoing negotiations with our landlords to perform by this disaster collectively,” Gap CFO Katrina O’Connell claimed Thursday. “We price these associations and are dedicated to getting mutually agreeable solutions that will permit both of us to advantage from an aligned strategic prepare.”
Among the 4 Gap brands, web sales fell 42% at Outdated Navy in the to start with quarter, fifty% at Gap, forty seven% at Banana Republic, and eight% at Athleta.
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