Gap, Inc. (GPS) misses third quarter PSE by 24c and cuts EPS forecast for fiscal year
Best StreetInsider.com tickers, 11/23/2021
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Gap, Inc. (NYSE: GPS) reported third-quarter EPS of $ 0.27, down $ 0.24 from analysts’ estimate of $ 0.51. Revenue for the quarter was $ 3.94 billion against a consensus estimate of $ 4.47 billion.
Gap, Inc. is forecasting EPS for fiscal 2021 of $ 1.25 to $ 1.40, against a consensus of $ 2.20.
- The company now expects its full-year diluted earnings per share to be between $ 0.45 and $ 0.60, which includes a loss of $ 325 million on debt extinguishment and approximately $ 120 million in net charges primarily related to divestitures and changes in its operating activities in Europe. model. Excluding these charges, adjusted diluted earnings per share for the year is expected to be between $ 1.25 and $ 1.40, which takes into account a range of on-time delivery rates for our vacation flows and other challenges. of the supply chain. Those forecasts include estimated lost sales of $ 550 million to $ 650 million due to supply chain constraints on available inventory, as well as approximately $ 450 million in total air freight expenses for the year. The company noted that when adjusting for transient costs and sales lost due to the acute disruption, the business momentum is strong.
- Net sales: The company now expects revenue growth of around 20% compared to fiscal 2020.
- Operating margin: The company now expects its reported operating margin for fiscal 2021 to be around 4.5%, with an adjusted operating margin of around 5%, on track to decline. ” achieve an operating margin of 10% by the end of 2023.
- Net interest expense: The company expects full-year net interest expense of $ 163 million, down $ 47 million from previous forecast, reflecting lower interest rates for the third and fourth quarters and a reduction in the company’s overall debt balance.
- Effective tax rate: The company now expects its effective tax rate for fiscal 2021 to be approximately 23%. Excluding the net impact of disposals, strategic changes in its European operations and loss on debt extinction, the company expects its adjusted effective tax rate for fiscal 2021 to be around 26%.
- Capital Expenses: The company continues to expect capital expenditures to be approximately $ 800 million in fiscal 2021. In accordance with the company’s Power Plan 2023 strategy, capital expenditures are expected to primarily support growth investments, including digital capacity, loyalty and supply chain projects, as well as with an investment in store growth for Old Navy and Athleta.
- Real Estate: The company plans to open approximately 30 to 40 Old Navy and 20 to 30 Athleta stores in 2021, as well as close approximately 75 Gap and Banana Republic stores in North America.
- “While there is still a lot of work to be done to address the short-term challenges in the macro environment, the team has made tremendous progress, adapting quickly without ever deviating from our long-term goals.” said Katrina O’Connell, Executive Vice President. President and Chief Financial Officer, Gap Inc. “We have strong demand for our brands and the rationalization and divestitures of our fleet are progressing well and adding value. Our operating margin remains on track to reach 10% by 2023, in line with our plan, even as we navigate these short-term disruptions. While our mitigation efforts incur significant transitional costs, we view them as investments in preserving market share and promoting the overall health and relevance of our brands. “
For earnings history and earnings data on Gap, Inc. (GPS), click here.
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