Shares of Gap Inc (NYSE: GPS) plummeted after-hours and premarket after the company reported its fiscal third-quarter earnings that failed to impress investors and missed analyst expectations.
Despite its revenue of $3.99 billion, above estimates of around $3.82 billion, Gap’s earnings per share was $0.25, below the expected $0.32.
The company said its EPS was partially offset by higher operating expenses that included a significant rise in marketing support across all of its brands.
Net sales were flat year over year with a 20% decline in store sales. However, online sales increased by 61%.
“Our third-quarter results reflect our Power Plan 2023 in action — specifically the strength of our online business, which comprised 40% of sales, and our commitment to meeting the shopping preferences of our customers through our leading omni platform,” stated Sonia Syngal, Chief Executive Officer, Gap Inc.
Within its individual brands, Athleta and Old Navy global saw net sales increase by 35% and 15% respectively, with comparable sales for Athleta the highest in the brand’s history. Gap Global and Banana Republic saw net sales fall by 14% and 34%.
The company said it will not be providing a fiscal year earnings outlook as the continued rise in coronavirus cases remains a concern. Still, they believe that net sales will be equal or slightly higher than the previous year.
“Importantly, our strong cash flow continues to provide us ample liquidity to invest in marketing support behind our brands, as well as digital capabilities to drive our rapidly growing online business,” said Katrina O’Connell, Gap’s Chief Financial Officer.
Gap shares are lower premarket, currently priced at $24.04, down 10.53% from Tuesday’s close at $26.87.