Gap shares soared 15% after relatively positive reporting - Kommersant
American clothing retailer Gap published results for the first quarter ended 29 April. The results were slightly better than expected, causing the company's shares to soar by almost 15% on the New York Stock Exchange.
Gap's net sales decreased from $3.5 billion to $3.3 billion, gross profit increased from $1.1 billion to $1.2 billion, operating costs decreased from $1.3 billion to $1.2 billion, net loss decreased from $162 million to $18 million. Earnings per share were $0.01, while analysts had expected a loss of $0.16. During the pandemic, the company, like many other retailers, actively increased stocks of goods, given the high demand. However, after the pandemic, demand began to fall - Gap remained with significant inventory. In the latest quarter, the company managed to reduce these inventories by 27% compared to the same period last year.
Over the past five years, Gap shares have lost more than 70%, financial performance has fallen. Last July, CEO Sonia Singal was sent to resign. To rectify the situation, Bob Martin, executive chairman of Gap's board of directors, was temporarily appointed to the post of CEO. During his tenure, he played two rounds cuts, having laid off 2,300 people, reduced operating costs and inventory, and achieved an increase in profitability. In addition, Gap will close about 350 underperforming Gap and Banana Republic stores before the end of this year. Gap now has more than 3,450 stores in 40 countries.