Gap Reports A Weak Outlook For FY 2016
Gap Inc (NYSE:GPS) reported its second quarter results on August 18, 2016. While the company beat consensus estimates on both EPS and revenue, both metrics were down as compared to the prior year.
See our complete analysis for Gap Inc.
Gap reported a 24% fall in operating income and a 43% drop in net income for the second quarter, while also offering a downbeat outlook for the year. The company forecast full-year EPS to be in the $1.87 to $1.92 range, down significantly from its prior expectation of $2.20 to $2.25. As noted by CEO Art Peck, the pace of improvement in the business remains unsatisfying, but the company shows signs of progress. This was demonstrated in the healthier merchandise margins, reflecting reduced promotions and markdowns. Gap has also been focusing on controlling inventories and shortening production times, as it is striving to replicate the success of its Old Navy brand at its namesake brand and at Banana Republic. The company has been attempting to refresh its Banana Republic line, with little success however, reflected in a sixth straight quarter comparable store sales decline.
The company’s Athleta brand, which targets the athleisure space, offers a good opportunity for growth, and the company is aiming to use this opportunity in Gap and Old Navy, by introducing technical innovation into ready-to-wear. Besides this, Gap is also introducing stain-resistant clothing, adding more stretch in its men’s lines, and testing smaller-sized Old Navy stores. The company had earlier announced plans to shut down 75 Old Navy and Banana Republic stores outside North America, while at the same time focusing on areas which have the greatest potential for success.
Have more questions about Gap Inc? See the links below:
- Fall In Sales To Weigh On Gap In The Second Quarter
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- Are Gap Inc’s Earnings Volatile?
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- By How Much Did Gap Inc’s Revenue & EBITDA Grow In The Last Five Years?
- What Is Gap Inc’s Fundamental Value Based On Expected 2016 Results?
- By What Percentage Can Gap Inc’s Revenues Grow Over The Next Three Years?
- How Are Gap Inc’s Old Navy Revenues & Earnings Expected To Grow Over The Next Five Years?
- How Are Gap Inc’s Banana Republic Revenues & Earnings Expected To Grow Over The Next Five Years?
- How Much Revenues Can Gap Inc’s Athleta Brand Add By 2020?
- What’s Next For Gap’s Stock?
- Mind The Gap: Underwhelming Q2 Earnings Likely For The Apparel Retailer
- With The Stock Almost Flat This Year, Will Q1 Results Drive Gap’s Stock Higher?
- Gap Stock Almost Flat This Year, What’s Next?
- Does Gap Stock Have More Room To Run After Rising 67% This Year?
- Gap Q2 Earnings: What Are We Watching?
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