Gap (NYSE: GAP), the US clothing retailer behind the Gap, Old Navy and Banana Republic brands, rose in after-hours trading on Thursday after second-quarter profit beat estimates and management raised full-year guidance, even as revenue fell short.
Gap shares closed Thursday’s regular session at $20.79, down 1.7% from Wednesday’s $21.15, within a 52-week range of $17.94 to $28.88. CNBC reported the stock rose roughly 7% in after-hours trading once the results and a leadership change at Old Navy were announced after the close, with other reports pointing to a larger move.
Adjusted earnings per share of $0.52 beat the $0.48-$0.50 consensus, though revenue of $3.65bn missed expectations and fell 2% year-on-year. The shortfall was concentrated at Old Navy, where comparable sales dropped 4%, the brand’s first negative quarter in 11 quarters. Chief executive Richard Dickson said on the earnings call that “this is the first negative quarter for Old Navy in 11 quarters”, pointing to a weak seasonal assortment of dresses, shorts and swimwear alongside a marketing shortfall that hurt store traffic.
Ready to put what you’ve learned into practice?
Try IG’s platform with £10,000 in virtual funds and practise trading
without putting your own money at risk.
Try IG with a demo account →
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
Learn the markets with IG Academy
Build your knowledge with IG Academy educational content, then use a
demo account to practise what you’ve learned on the IG platform.
Explore IG →
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
See how trading works before risking real money
IG’s demo gives you access to thousands of markets and £10,000 in
virtual funds, so you can explore the platform and test your ideas first.
Open an IG demo →
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
Turn trading theory into practical experience
Learn with IG Academy, explore charts and market tools, and practise
strategies in a simulated trading environment before going live.
Start practising with IG →
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
Ready to take your learning further?
IG combines market education, analysis and an established trading platform,
giving you the tools to keep learning as you develop your trading skills.
Discover IG →
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
The Gap brand offset the weakness with its 11th straight quarter of positive comparable sales, up 10%, while Banana Republic posted a fifth consecutive quarter of growth. That strength let management raise full-year adjusted earnings guidance to $2.35-$2.45 a share and lift adjusted operating margin guidance to 7.4%-7.6%, while narrowing full-year sales growth guidance to 1%-1.5%.
Gap also named Michael Francis, Old Navy’s Chief Customer Officer and a former Walmart, Target and J.C. Penney executive, as the brand’s new President and CEO from 2 November, succeeding Horacio Barbeito.
Gap next updates the market at its third-quarter results, when investors will look for signs that Old Navy’s seasonal assortment and marketing have been corrected under its incoming leadership.
