Gap’s Pandemic Pain Worse Than Expected

Gap shares tumbled in just after-hours investing Thursday as the troubled retailer documented a coronavirus-relevant decline that was worse than expected.

For the to start with quarter, Gap swung to a internet decline of $932 million, or $two.51 for each share, from with a financial gain of $227 million, or sixty cents a share, a yr back. Web profits dropped 43% to $two.11 billion, reflecting the momentary closure of around 90% of Gap’s world keep fleet amid the pandemic.

Additional than one,500 of its outlets have now reopened and the company said it “had leveraged its omni capabilities to continue on to provide customer demand on-line through its scaled e-commerce system.”

On the web profits greater 13% yr-more than-yr in the quarter ended May well two and by one hundred% yr-more than-yr last month.

“This on-line momentum, enabled by new omni-capabilities that have expanded the way consumers can store with us, leaves us nicely-positioned to fuel our brands heading forward,” CEO Sonia Syngal said in a news launch.

But in the prolonged session, Gap shares fell five.five% to $11.47. Analysts experienced expected a decline of sixty cents for each share on revenue of $two.35 billion.

As Barron’s stories, “Gap is hardly the only apparel retailer feeling the warmth, but the company experienced been battling even in advance of the pandemic.” Its shares are down much more than 31% for the yr even while they received a boost just after it scrapped its plan to spin off its Aged Navy brand.

Considering that April, Gap has stopped paying out lease at all keep areas afflicted by required closures throughout the pandemic. Simon Home Group, the biggest shopping mall operator in the state, has sued the company for $69.five million in unpaid lease throughout much more than four hundred homes.

“We are in active and ongoing negotiations with our landlords to do the job through this crisis collectively,” Gap CFO Katrina O’Connell said Thursday. “We price these associations and are fully commited to locating mutually agreeable options that will permit equally of us to reward from an aligned strategic plan.”

Between the 4 Gap brands, internet profits fell 42% at Aged Navy in the to start with quarter, 50% at Gap, 47% at Banana Republic, and 8% at Athleta.

Cindy Ord/Getty Illustrations or photos

earnings, ecommerce, Gap, Katrina O’Connell, Aged Navy, retailer, Sonia Syngal