Gap Inc (NYSE:GPS) shares tumbled in extended trading after the company reported a much wider than expected loss in the fourth quarter of fiscal year 2023 as inflation-weary shoppers curbed spending.
For the period ended January 28, 2023, the owner of the Banana Republic, Old Navy, and Gap brands reported a loss of $0.75 per share. This was higher than the consensus estimates for a loss of $0.59 per share on revenue of $4.4 billion.
The apparel retail company reported net sales of $4.24 billion, down 6% compared to last year, inclusive of an estimated 1-point foreign exchange headwind. Net sales were in-line with the company’s expectations for mid-single-digit declines in the quarter.
In addition, online sales decreased by 10% compared to last year and represented 41% of total net sales.
Investors sent Gap shares down by almost 6.7% to $10.80 after the market closed.
In a sign that demand is slowing, Gap forecasted full-year fiscal 2023 net sales to decrease in the low-to-mid single digit, compared with analysts' expectations of a 1.64% rise.
"To enter fiscal 2023 in a more competitive position, we took quick and effective action to clear excess inventory, improve assortment balance, particularly at Old Navy, and to meaningfully optimize our cost structure, resulting in $550 million in annualized savings identified to date," Gap CEO Bob Martin said in a statement.
The company’s board is getting close to choosing the next CEO, revealed Martin.
Gap Inc (NYSE:GPS) offers apparel, accessories, and personal care products under the Gap, Old Navy, Banana Republic, Piperlime, Athleta, and Intermix brands.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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