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Q1 2023 Earnings Report for Gap GPS

Gap GPS Q1 earnings report 2023

Gap GPS Q1 earnings report 2023

Gap Reports Declining Sales, but Improving Margins in Q1 2023

Gap Inc., the American clothing retailer, reported another quarterly loss and decreasing sales across its four brands but stated that it has improved its margins and is making progress. The company, which includes its namesake label, Old Navy, Banana Republic, and Athleta, has been without a CEO for almost a year as it attempted to restructure the business, get back to profitability, and better understand its target consumers. The company achieved an adjusted earning per share (EPS) of one cent, while revenue reached $3.28 billion. This result compares with $3.29 billion estimated by analysts surveyed by Refinitiv.

Overview of Q1 Financials
– EPS: one cent, adjusted (compared to data unavailable).
– Revenue: $3.28 billion vs $3.29 billion expected.

The company lost $18 million, equivalent to five cents per share, down from a loss of $162 million, or 44 cents a share, during the same period in the previous year. Sales fell by 6% to $3.28 billion, compared to $3.48 billion a year earlier. In the most recent quarter, comparable sales were down by 3%, while store sales decreased by 4% compared to the previous year. Gap’s online sales, which accounts for 37% of its overall sales, decreased by 9% YoY but returned to pre-pandemic levels, the company said. The retailer’s gross margin increased by 5.6 percentage points YoY to reach 37.1% in Q1.

As part of its cost-cutting drive, Gap announced last month that it intends to lay off around 1,800 employees, more than three times the 500 layoffs it announced in September, and has cut 25% of its headquarters roles over the past year. Additionally, the company said that management layers were reduced from 12 to 8, resulting in a reduction in the number of direct reports each manager has from two to four.

FAQs

Q: Which brands are included within Gap Inc.?
A: Gap Inc. comprises four brands: Gap, Old Navy, Banana Republic, and Athleta.

Q: How did Gap perform in Q1 2023?
A: Gap reported another quarterly loss and decreasing sales across its four brands, but it has improved its margins. The company’s sales dropped 6% YoY to $3.28 billion.

Q: How did Gap’s adjusted EPS in Q1 2023 compare to estimates?
A: The company achieved an adjusted EPS of one cent, while revenue reached $3.28 billion. It was unclear whether Wall Street was anticipating this EPS since comparable data was unavailable.

Q: When did Gap last have a CEO, and why did the company work on restructuring?
A: Gap has been without a CEO for nearly a year as it worked to restructure the business, regain profitability, and better understand its target consumers.

Q: Did Gap announce any layoffs, and how has it cut costs?
A: Last month, Gap announced that it would lay off about 1,800 employees, more than three times as many as the 500 layoffs it announced in September, as part of a broad effort to cut costs and streamline operations. Over the past year, it cut 25% of its headquarters roles and management layers from 12 to 8, resulting in a reduction in the number of direct reports each manager has from 2 to 4.

Q: Why did Gap’s online sales decrease YoY in Q1 2023?
A: Online sales, which account for 37% of Gap’s overall sales, decreased by 9% YoY. However, the company stated that sales trends are approaching historically normal levels, indicating that there was a considerable shift in demand during the pandemic.

Q: What was the company’s Q1 2023 gross margin?
A: Gap’s gross margin increased by 5.6 percentage points YoY to reach 37.1% in Q1, thanks to lower air freight expenses and reduced discounts. However, ongoing inflationary costs offset some of these improvements.

Q: What are Gap’s revised forecasts for the full year?
A: Gap’s full-year outlook remains mostly unchanged from the forecast it gave in March. For the second quarter, the company is anticipating mid to high-single digit range declines in net sales.

Gap GPS Q1 earnings report 2023
Gap GPS Q1 earnings report 2023

Q1 2023 Earnings Report for Gap GPS

Gap reported another quarter of net losses and declining sales across its four brands but the retailer insisted it’s making progress – and has managed to significantly improve its margins.

For the three-month period ending April 29, the company’s sales dropped to $3.28 billion, down 6% from $3.48 billion a year earlier. Gap – which includes its namesake brand, Old Navy, Banana Republic and Athleta – has been without a CEO for nearly a year as it worked to restructure the business, understand its consumers better, and get back to profitability. Despite reporting lower sales, the company’s margins improved, and it was able to hold the line on discounts.

Old Navy, which accounts for the majority of Gap’s revenue, saw net sales drop 1% to $1.8 billion and comparable sales down 1%. Sales were strong in its women’s category, but the gains were offset by softness in active and kids and an ongoing slowdown in consumer demand. Gap reported $692 million in sales, a 13% drop year over year, and a 1% increase in comparable sales. Banana Republic saw $432 million in sales, down 10% year over year, while Athleta’s net sales were down to $321 million, an 11% drop year over year, and comparable sales were down 13%.

Gap’s full-year outlook was largely unchanged from the forecast it gave in March. The company expects gross margin to continue to rise and capital expenditures to come down to $500 million to $525 million, compared to a prior range of $500 million to $550 million.

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