Gap Inc. (GPS: NYE) stock soared over 17% in extended trading yesterday after the company reported better-than-expected 3rd quarter earnings results. Gap beat Wall Street estimates for both earnings and revenue, sending its shares up as much as 18% in after-hours trading.
Key Findings from the Q3 Earnings:
Here are the key highlights from the Gap Q3 earnings report:
- Adjusted earnings per share: $0.59 vs. $0.20 consensus estimate.
- Revenue: $3.77 billion vs. $3.61 billion consensus estimate.
- Comparable-store sales: -2% vs. -7% consensus estimate.
Despite a 6.7% decline in year-over-year revenue, Gap’s performance was impressive considering the ongoing challenges facing the retail industry. The company’s better-than-expected results were driven by strong online sales and cost-cutting measures.
Gap’s online sales grew 12% year-over-year, reflecting the company’s continued focus on e-commerce. The company also benefited from cost-cutting measures, which helped to offset the impact of lower brick-and-mortar sales.
Gap Sees Positive Future Outlook:
Despite the challenges facing the retail industry, Gap is optimistic about its future. The company expects to generate full-year revenue of $13.1 billion to $13.5 billion, which would be in line with Wall Street estimates. Gap is also confident in its ability to grow its online business. The company expects its online sales to reach $5 billion by 2026, up from $3.4 billion in 2022.
Following Gap’s strong quarterly report, several analysts upgraded the company’s stock. Bank of America upgraded Gap to buy from neutral with a price target of $17 per share. Morgan Stanley upgraded Gap to overweight from equal weight with a price target of $16 per share.
Conclusion:
Gap’s impressive third-quarter results are a testament to the company’s ongoing transformation. The company is well-positioned for future growth, thanks to its strong online business, cost-cutting initiatives, and optimistic outlook. Investors should continue to watch Gap closely as it executes its turnaround plan.
