Gap Inc (NYSE: GPS) slipped nearly 10% in extended hours on Thursday after reporting disappointing results for its fiscal fourth quarter.
The retail stock is also trading down because the clothing company said its sales will continue to take a hit this year. Discussing the company’s earnings print on Yahoo Finance Live, CFRA analyst Zachary Warring said:
It would be nice to get a permanent CEO, but I don’t think that’s the problem. It’s part of the problem for sure, but the brands they have, have not been executing obviously.
It’s been nearly eight months now since Sonia Syngal stepped down as the Chief Executive.
Also on Thursday, Gap Inc said it will cut executives and take other measures to save $300 million in fiscal 2023. Warring added:
A lot of investors got excited about Athleta because of growth. You’re seeing that falter now. They have 4 or 5 brands that aren’t doing much in terms of growth. You’ll want to see Athleta return to 15% growth before you get excited about Gap.
His “sell” rating on Gap stock comes with a price target of $5.0 only – down another 50% from here.
Lost $273 million versus the year-ago $16 million
Per-share loss also climbed from 4 cents to 75 cents
Revenue declined 6.0% year-on-year to $4.24 billion
Consensus was 46 cents loss on $4.36 billion revenue
A 5.0% hit to comparable sales in the recent quarter was also meaningfully bigger than expected, as per the earnings press release. CFRA’s Warring also said:
We like athleisure as a space and we think it’s more of a Gap issue right now.
According to the California-based company, weakness in sales was seen across all of its brands in the fourth financial quarter. Versus its year-to-date high, Gap stock is now down about 30%.
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