Gap Inc. shares plunged after it lowered its outlook for net sales growth for the year.
The retailer now sees net sales up as much as 2%, after previously forecasting as much as 3% growth. Overall comparable sales, as well as comparable sales for the Old Navy, Banana Republic and Athleta brands, missed analyst estimates for the quarter ended May 2.
Shares of Gap fell more than 15% in after-hours trading at 4:32 p.m. in New York. The company’s stock is down 2.3% year to date as of Thursday’s close.
Richard Dickson, who took over as chief executive officer in 2023, has been using splashy collaborations and celebrities to help revive the company. The turnaround though has been uneven: Gap’s namesake brand has made the most progress while its athleisure chain Athleta continues to struggle. Sales at Banana Republic and Old Navy had started to show signs of improvement, but fell short in the last quarter — a surprising development at value-driven Old Navy.
Dickson is trying to win back shoppers as they navigate high gas prices and persistent inflation. Many consumers are pulling back on spending and delaying expensive purchases, according to the Conference Board.
The San Francisco retailer also forecast net sales for the current quarter to be flat to down 1% year over year, short of analysts’ estimates.
On the bright side, the Gap brand far surpassed comparable-sales estimates last quarter. And the company notched up its outlook for adjusted diluted earnings per share for the year, now seeing as much as $2.40, up 5 cents from its previous high end.
Dickson has shaken up the company’s leadership team, most recently appointing a new head of the Banana Republic brand.
Shares of competitor American Eagle Outfitters Inc. also saw a double-digit drop in postmarket trading Thursday after the retailer reported results.
Written by: Lily Meier @Bloomberg
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