Gap company Lower than Wall Street’s estimate Quarterly profit Tuesday as an online sales hub led to a significant increase in marketing and shipping costs, which resulted in the submission of a Apparel retailer Shares are down about 11% in extended trading.
The company also expected fourth-quarter sales to be flat or slightly higher than last year, and has warned of pressure on margins from higher shipping costs, including air freight, as retailers rush to move merchandise ahead of the holiday season.
Online sales rose 61% in the third quarter, as customers stuck at home shopping for comfy joggers, yoga pants and T-shirts from its Old Navy and Athleta brands, helping Gap report a sudden increase in similar sales.
But that had a cost, as operating expenses rose nearly 8% in the quarter.
|ribbon||Safety||the last||They change||They change%|
|GPS||The difference||26.87||+0.81||+ 3.11%|
Sonia Singal, CEO of Gap, which has launched digital campaigns such as “Stand United” and “Be the Future,” said it would continue to make marketing investments.
“In this COVID environment and the fact that many of the weaker players are seeing a great deal of disruption, we see this as an important time to invest in our brands to generate demand,” Singal told analysts.
Comparable sales rose 5%, beating the median estimate of a 0.62% decline, according to IBES data from Refinitiv.
Store sales fell 20% in the third quarter, and Gap confirmed its intention to close several hundred Gap and Banana Republic stores globally, with the lucrative Old Navy and Athleta stores opening.
The San Francisco-based retailer reported net income of $ 95 million, or 25 cents a share, for the three months ending October 31, down from a $ 140 million earnings, or 37 cents a share, a year earlier.
Analysts had expected the company to earn 32 cents a share.
(Prepared by Nivdita Palu in Bengaluru; edited by Sriraj Kalofila)