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Latest news updates: Gap shares tumble 17% after retailer slashes full-year outlook


Gap shares tumbled more than 17 per cent to a pandemic-era low in after-hours trading after the US apparel retailer slashed its full-year outlook and blamed many of its woes on supply chain disruptions.

The company said on Tuesday it now expects net sales growth of 20 per cent in its fiscal year, down from 30 per cent previously, while its forecast operating margin is now 4.5 per cent, down from 7 per cent.

The company, which owns brands including Banana Republic and Athleta, said it expects to report diluted earnings in the range of 45 cents to 60 cents a share in its fiscal year, down from its previous guidance for $2.10 to $2.25.

Much of that revision is due to a $325m loss on the extinguishment of debt and about $120m in net charges related to asset sales and changes to its operating model in Europe. 

US gymnast Simone Biles wears Athleta brand gear
US gymnast Simone Biles is one of the more prominent wearers of the Gap-owned Athleta brand © Athleta

However, the company said it continued to struggle with supply chain disruptions, Covid-related factory closures and congestion at ports.

In its third quarter, Gap swung to a net loss of $152m compared with a $95m profit a year ago, while net sales dropped 1.2 per cent to $3.94bn. Analysts had forecast net income of $193.4m (before taking into account the company’s strategic actions in Europe and its loss on the extinguishment of debt) and net sales of $4.4bn.

The company said in a statement accompanying its results that “meaningfully reduced inventory positions throughout the quarter negatively impacted sales as brands were unable to fully meet strong consumer demand”.

Gap shares were down 17.3 per cent at $19.42 in after-hours trading on Tuesday to their lowest level since January 2020. The share price shed 1.8 per cent during the regular trading session.



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