Gap Inc (NYSE:GPS) shares opened as much as 10% higher on Friday after the specialty apparel retailer swung to a third-quarter profit of $282 million, or $0.77 per share unadjusted, from a net loss of $152 million, or $0.40 per share, during the corresponding period in 2021.
Gap, which owns the Old Navy and Banana Republic clothing brands, also saw its revenue rise 2% year over year to $4.04 billion.
Analysts were expecting the company to break even on a per-share basis on $3.8 billion in revenue.
Gap’s chief financial officer Katrina O’Connell said in a statement that while the company made progress in reducing its bloated inventory, it will “continue to take a prudent approach in light of the uncertain consumer and increasingly promotional environment as we look to the remainder of fiscal 2022,” as reported by CNBC.
The company also provided a cautious outlook for the holiday season, saying it expects overall net sales could be down mid-single digits year-over-year in the fourth quarter of 2022.
Gap noted it incurred $53 million in impairment charges during the quarter related to the Yeezy Gap clothing line, which was removed from its stores in October following public anti-Semitic remarks from the brand’s creator, the artist formerly known as Kanye West.
As well, Gap said its same-store sales rose 1% year over year, beating analyst expectations of a 3.2% decline.
Contact Sean at sean@proactiveinvestors.com