Gap Boosts Annual Sales, Profit Forecast as Recovery Grinds On


Gap Inc. topped Wall Street’s earnings expectations and boosted its profit forecast even as the retailer’s sales fell short of estimates, showing the challenge apparel companies face in recovering from a pandemic slump.

  • The company, which also owns Old Navy and Banana Republic, said comparable sales rose 28% from a year earlier, below the 58% average of analysts’ estimates.
  • The company sees full-year earnings of $1.55 to $1.70 a share, up from a prior forecast of no more than $1.35. It sees net sales growth for fiscal 2021 to rise in the low-to-mid 20% range from a year earlier -- an increase from the previous projection of growth in the mid-to-high teens.

Key Insights

  • Investors have been watching for signs of recovery across the apparel industry, which struggled during lockdowns earlier in the pandemic. Chief Executive Officer Sonia Syngal said in a statement that Gap had “market share gains that outpaced the industry” and saw “particular strength” in its Old Navy and Athleta brands.
  • The company has accelerated its move to e-commerce since the pandemic hit. Digital sales were 82% higher than in 2019. Syngal said the company saw a resurgence in summer fashion such as dresses.

Market Reaction

  • The shares swung between gains and losses in postmarket trading, falling 0.9% as of 4:34 p.m. in New York. The stock had climbed 74% this year through Thursday’s close.

©2021 Bloomberg L.P.

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