Gap Shares Rise After Prolonged Slump Shows Signs of Easing

(Bloomberg) -- Gap Inc. jumped after the retailer posted quarterly sales that fell less than expected, while its profit outlook for the current year outpaced expectations. The company said, however, that for now its projections mostly exclude the impact of the coronavirus outbreak.

• Across all brands, the closely watched metric of same-store sales fell 1%, better than the 3.9% average drop from estimates compiled by Consensus Metrix. Old Navy, which is the company’s most important brand from a revenue standpoint, reported comparable sales declined 2% -- slightly better than the average estimate.

Key Insights

• Sonia Syngal, the Old Navy chief who was recently tapped to take over as chief executive officer of the parent company, may be taking the reins as a lengthy sales slump starts to subside. Interim CEO Bob Fisher said Gap “began to see stabilization in our business in the fourth quarter, driven primarily by Old Navy’s performance.”
• Gap said it is “facing a period of uncertainty regarding the potential impact on both our supply chain and customer demand” due to coronavirus, which is disrupting daily life across the U.S.
• The company said on Thursday it is encouraging its workers in its New York and the Bay Area offices to work from home until March 31. In its stores, workers who contract coronavirus will continue to be paid. Gap closed its New York office last week after reporting that a worker had contracted coronavirus, which the company later said was an inaccurate account. Investors will be listening for more details on the company’s upcoming conference call.

Market Reaction

• The shares rose 1.3% at 4:50 p.m. in late trading on Thursday. The company ranks among the worst performers on the S&P 500 Index over the past 12 months.

To contact the reporter on this story: Jordyn Holman in New York at jholman19@bloomberg.net

To contact the editors responsible for this story: Anne Cronin at acronin14@bloomberg.net, Jonathan Roeder, Sally Bakewell

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