Gap cuts sales guidance after disappointing Old Navy performance
Gap has lowered its sales guidance after Old Navy's performance fell short of expectations in the fiscal first quarter. While Old Navy's comparable sales grew only 1%, the company raised its earnings per share forecast due to favorable tax rates and interest income. CEO Richard Dickson noted that the weak sales were due to product assortment issues rather than broader consumer trends.
- ▪Old Navy's comparable sales grew 1%, below the expected 3%.
- ▪Gap cut its sales outlook, now expecting companywide sales growth of 1% to 2%.
- ▪The company raised its adjusted earnings per share guidance to between $2.30 and $2.40.
- ▪Gap's stock dropped nearly 10% in extended trading following the disappointing results.
- ▪Sales at Gap's namesake brand soared 10%, outperforming expectations.
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Sales at Gap's largest brand Old Navy fell short of expectations during its fiscal first quarter, leading the retailer to cut its sales guidance on Thursday.During the quarter, Old Navy's comparable sales grew 1%, while analysts expected them to grow 3%, according to StreetAccount. As a result, Gap cut its sales outlook and is now expecting companywide sales to grow between 1% and 2%, down from a prior range of between 2% and 3%. While Gap cut its sales outlook for the year, its profitability is another story. The company raised its guidance and is now expecting adjusted earnings per share to be between $2.30 and $2.40, compared with a prior range of between $2.20 and $2.35.
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