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Gap (GPS) Third Quarter 2021 Profits Missing, Cutbacks Forecast

A pedestrian walks past the closed GAP flagship store on August 18, 2020 in San Francisco, California.

Justin Sullivan | Getty Images

Shares of Gap Inc. fell on Tuesday after the company slashed its outlook for the full year as third-quarter tax results fell short as Covid-related plant closures resulted in significant delays of produced during the quarter.

Its stock was recently down 10% amid protracted trading on the news.

“As we enter the third quarter with increasing momentum, acute headwinds in the supply chain have affected our ability to fully meet strong customer demand,” said Managing Director Sonia Syngal in a statement from hurry.

Gap said it has invested in air cargo to help ease some of the port congestion issues during the holidays. But it also means additional expenses that will weigh on profits in the short term.

Here’s how Gap performed in the three-month period ended Oct. 30 compared to what analysts expected, using data from Refinitiv:

  • Earnings per share: 27 cents adjusted vs. 50 cents expected
  • Turnover: $ 3.94 billion against $ 4.44 billion expected

Gap said it recorded a net loss of $ 152 million, or 40 cents per share, compared with net income of $ 95 million, or 25 cents per share, a year earlier.

Excluding items, it gained 27 cents per share, below the 50 cents analysts were looking for, according to Refinitiv.

Revenue edged down to $ 3.94 billion from $ 3.99 billion a year earlier. It missed expectations of $ 4.44 billion.

Gap now expects annual revenue to be up about 20%, which is lower than its previous forecast of about 30% increase. Analysts polled by Refinitiv were looking for a 28.4% year-on-year gain.

Gap’s expectations for adjusted annual earnings have been lowered to a range of $ 1.25 to $ 1.40 per share, from an earlier range of $ 2.10 to $ 2.25 per share. Analysts expected Gap to earn $ 2.20 a share, Refinitiv said.

Gap said its revised outlook took into account about $ 550 million to $ 650 million in lost sales due to supply chain constraints and about $ 450 million in air freight costs for the year.

Find the full publication of Gap’s results here.

This story is developing. Please check for updates.

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