News

Gap Stock Jumps 15% After Reporting Strong Q3 Performance

James L. Flint

• November 16, 2023

Gap Inc. experienced a surge in its stock price, with a 15% increase in after-hours trading, following the company's release of third-quarter financial results that surpassed expectations.

Despite a decline in sales by 6.7% to $3.77 billion, Gap achieved a profit of $218 million, or 58 cents per share. This figure is slightly lower than the $282 million, or 77 cents per share, recorded in the same period last year. However, analysts had only predicted earnings of 24 cents per share, highlighting the company's better-than-expected performance.

Gap's various brands, including Athleta, Banana Republic, and its namesake Gap brand, faced challenges during this period as their respective sales dropped between 18% and 11%.

During an earnings call with analysts, Gap's newly appointed CEO, Richard Dickson, emphasized the company's focus on improving its promotional tactics and gaining market share. He also mentioned that the company has successfully reduced its inventory by nearly $800 million since last year's peak.

Dickson further stated, "Our efforts so far have yielded positive results in terms of our working capital and balance sheet strength. We will continue to prioritize controlling what we can control to achieve consistent performance both in the short and long term."

While Gap remains mindful of the uncertain consumer environment during the holiday season, Dickson expressed confidence in the company's well-controlled inventories.