Gap reported net sales of $4.04 billion, up 2% compared to the prior year.
Gap Inc (NYSE: GPS) – a global retailer with a collection of brands including Old Navy, Gap, Banana Republic, and Athleta – has managed to beat Wall Street expectations on Thursday after reporting better-than-anticipated earnings results for the third quarter (Q3 2022). During the third quarter, Gap recorded a revenue of $4.04 billion versus $3.8 billion estimated by analysts, according to a survey conducted by Refinitiv.
As the holiday season nears, Gap has reportedly recorded a sharp uptick in demand for its products. As a result, GPS shares closed Thursday’s market trading at $12.71, up 5.56 percent from the day’s opening price. Additionally, Gap shares gained an extra 7.40 percent during the after-hours trading session to exchange around $13.65.
“….. We have sharpened our focus on execution to optimize profitability and cash flow, are bringing more rigor to our operations, and balancing our assortments in response to what our customers are telling us. While our efforts show early signs of improvement, we are clear that there is work to be done to deliver what our customers, employees, and shareholders expect from Gap Inc.” said Bob Martin, Executive Chairman and Interim CEO of Gap Inc.
Gap Inc Financial Highlights for Q3 2022
According to the third quarter earnings results, Gap reported net sales of $4.04 billion, up 2 percent compared to the prior year. Reportedly, online sales increased by 5 percent compared to the prior year, representing approximately 49 percent of total net sales for the third quarter.
In 2022, Gap reported that store sales increased by 1 percent compared to the prior year. On a more positive note, the company ended the third quarter with 3,380 store locations in over 40 countries, of which 2,743 were company operated.
Most importantly, the company closed the third quarter with cash and cash equivalent of $679 million, thereby giving it a stable balance sheet. The company’s adjusted diluted earnings per share (EPS) came in at $0.71.
The company’s year-to-date capital expenditures came in at $577 million. In its earnings report, Gap announced that it paid a third-quarter dividend of $0.15 per share, totaling $55 million. Forward, Gap’s Board of Directors approved a fourth-quarter fiscal 2022 dividend of $0.15 per share.
With a strong balance sheet, Gap has been undertaking a share repurchase program. During the third quarter, the company repurchased 1.2 million shares for $12 million.
Katrina O’Connell, Executive Vice President and Chief Financial Officer, Gap Inc said:
“In the near term, we remain focused on the actions necessary to reduce inventory, rebalance our assortments to better meet changing consumer needs, aggressively manage and reevaluate our investments, and fortify our balance sheet….”
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