Gap raises guidance ahead of holidays after storms, warm weather slowed sales

Hurricanes and unseasonably lukewarm upwind deed income astatine Gap during its fiscal 3rd quarter, but the apparel institution inactive posted amended than expected results, starring it to rise its yearly guidance for a 3rd clip this year. 

Gap, which runs Old Navy, Banana Republic, Athleta and its namesake banner, is present expecting fiscal 2024 income to beryllium up betwixt 1.5% and 2%, compared to erstwhile guidance of "up slightly." That's up of the 0.4% maturation that LSEG analysts had expected, and bodes good for the all-important vacation buying season, which is present underway. 

The institution is besides anticipating gross margins and operating income volition turn much than it antecedently expected.

Here's however the nation's largest specialty apparel retailer performed compared with what Wall Street was anticipating, based connected a survey of analysts by LSEG:

• Earnings per share: 72 cents vs. 58 cents expected
• Revenue: $3.83 cardinal vs. $3.81 cardinal expected

Gap's reported nett income for the three-month play that ended Nov. 2 was $274 million, oregon 72 cents per share, compared with $218 million, oregon 58 cents per share, a twelvemonth earlier. 

Sales roseate to $3.83 billion, up astir 2% from $3.78 cardinal a twelvemonth earlier.

Across Gap's business, unseasonably lukewarm upwind impacted income by astir 1 percent constituent during the quarter, portion storms and hurricanes led wide store income to autumn by 2%, CEO Richard Dickson told CNBC successful an interview. 

"We had antithetic circumstances, hurricanes, storms that led to astir 180 closures astatine the highest of the impact," said Dickson, adding the storms affected Old Navy, Gap's largest marque by revenue, the most. 

As soon arsenic the upwind turned around, income "rebounded" and the vacation buying play is disconnected to a "strong start" truthful far, said Dickson. 

"We are energized astir the holiday. Our teams are truly focused connected executing our plans. If we comparison ourselves to wherever we were past year, our brands are successful a overmuch much pronounced spot than they were past year," helium said. "We've got stronger marque identities and we're much practiced successful our playbook that we speech a batch about, driving amended product, amended pricing, much relevance, amended user acquisition and excellence successful execution." 

Since Dickson took the helm of Gap a small implicit a twelvemonth ago, he's worked to crook astir the concern aft years of declines. Under his direction, the institution has leaned into nostalgic selling and personage partnerships to reclaim taste relevance. Sales person grown for the past 4 quarters successful a row, but the institution is inactive smaller than it erstwhile was, and critics accidental it needs to bash much to hole its merchandise assortment and thrust afloat terms selling.

Here's a person look astatine each brand's performance: 

Old Navy: Gap said income astatine its largest marque grew 1% to $2.2 billion, portion comparable income were flat, shy of the 0.9% maturation that analysts had expected, according to StreetAccount. Old Navy's kids class was peculiarly impacted by the warmer weather, said Dickson. 

Gap: Gap's eponymous banner grew 1% to $899 cardinal during the quarter, portion comparable income were up 3% – amended than the 2.3% maturation Wall Street expected, according to StreetAccount. The marque has seen 4 consecutive quarters of affirmative comparable income and is benefiting from amended selling and product, the institution said. 

Banana Republic: The trendy workwear enactment grew income 2% to $469 cardinal portion comparable income fell 1%, a spot worse than the 0.8% driblet that StreetAccount had expected. The marque has worked to crook astir its men's business, which drove results during the quarter. Overall, it is inactive focused "on fixing the fundamentals," the institution said. 

Athleta: The athleisure limb of Gap's empire grew income by 4% to $290 cardinal portion comparable income were up 5%. The results weren't comparable to estimates. In the year-ago period, comparable income were down 19% astatine Athleta. Under its caller CEO, erstwhile Alo Yoga brag Chris Blakeslee, the marque has managed to crook things around.