As Gap increased layoffs during the first quarter, online sales declined 9 percent YoY but accounted for about 37% of net sales.
After starting the year with a bearish sentiment, Gap Inc (NYSE: GPS) – an American apparel company – saw its shares rise approximately 14 percent during Thursday’s after-market hours to trade around $8.44. The $2.79 billion valued company reported its first quarter earnings result on May 25, which was largely in line with analysts’ expectations. For Q1 2023 which ended on April 29, 2023, Gap reported revenue of $3.28 billion, whereas analysts surveyed by REFINITIV expected $3.29 billion.
As a result, the company posted an adjusted earnings per share of 1 cents while analysts surveyed by REFINITIV expected a loss of 16 cents during the quarter. Notably, the first quarter results marked the last days of Bob Martin, Executive Chairman and Gap Interim CEO, as the board of directors searches for a new head.
“The Gap Inc. Board of Directors and I have a deep appreciation for and confidence in the work that has taken hold under Bobby Martin and the Leadership Team, with results already showing progress, and more importantly, a collective focus on continued improvement still ahead. As we are engaged toward the appointment of a new Gap Inc. CEO to carry this work into the future, we look forward to the time when we will introduce this great company’s next leader – one who will bring passion, vision and an unwavering focus on the customer,” said Mayo Shattuck, Gap’s Lead Independent Director.
Closer Look at Gap Q1 2023 Results and Market Outlook
The company announced that it closed the first quarter with 3,453 store locations in more than 40 global countries, out of which 2,601 are Gap operated. The company’s net sales declined approximately 6 percent during the first quarter compared to the same time last year. As the company focuses more on online sales, internet sales declined about 9 percent during the first quarter compared to the same time last year. Reportedly, online sales accounted for about 37 percent of the total sales during the first quarter.
Last month, the company announced it plans to send home another 1,800 employees, where 25 percent of headquarters staff will be affected. Earlier, the company had notified investors that only 500 employees would lose their jobs.
As for the specific brands, Gap reported that Old Navy posted net sales of about $1.8 billion, down 1 percent YoY. The GAP segment reported net sales of about $692 million, a decline of approximately 13 percent compared to the same time last year. The company’s Banana Republic posted net sales of about $432 million during the first quarter, down 10 percent YoY. The Athleta section posted net sales of about $321 million during the first quarter, down 11 percent YoY.
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