The Gap, Inc.GAP
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Gap raised full-year profit and EPS guidance, lifted operating margin outlook, and reported $600M in buybacks.
Impact on stocks 1
Consumer Discretionary
The Gap, Inc.Gap Inc. raised its full-year profit and earnings guidance on August 27 even as total sales fell 2%, thanks to a standout performance from its namesake brand. The Gap brand posted a 10% jump in comparable sales, its eleventh straight quarter of growth, and climbed to the number four market share spot in kids and baby from number six. Banana Republic also delivered a fifth consecutive quarter of positive comps at 3% growth. As a result, the company lifted its adjusted operating margin outlook to 7.4% to 7.6% and adjusted earnings per share guidance to $2.35 to $2.45, backed by a 20 basis point gross margin gain and roughly $600 million in year-to-date buybacks. However, Old Navy comparable sales dropped 4% after misjudging its women's summer assortment, costing about 3 points of comps, and Athleta comparable sales fell 12% as its turnaround remains in early stages. Adjusted operating margin fell 70 basis points year over year, and adjusted earnings per share slipped to $0.52 from $0.57. Hedge fund ownership rose to 36 funds from 31, while short interest stands at 15.17% of the float, and the stock trades at a forward price-to-earnings ratio of 8.29.
The Gap, Inc.Gap raised full-year profit and EPS guidance, lifted operating margin outlook, and reported $600M in buybacks.