Gap Inc announces third-quarter results and goes down by 20%

Gap Inc (NYSE: GPS) is a portfolio of billion-dollar, purpose-led lifestyle and fashion brands including Athleta, Banana Republic, Gap, and Old Navy, and the biggest specialty clothing company in the United States. It recently announced its third-quarter financial results for 2021 and went down by 20% .

In this quarter, it reported a $0.40 diluted loss per share. The company excluded fees linked to restructuring its long-term net and debt charges linked to the strategic changes that occurred in its European business operations. 

What did top management say?

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Gap Inc’s Chief Executive Officer, Sonia Syngal, claimed that while they had growing momentum as they entered the third quarter of this fiscal year, acute supply chain headwinds negatively impacted their ability to meet the strong customer demand in the market was showing. 

However, the CEO said:

Still, we made an intentional investment in building enduring customer loyalty with accelerated use of air freight to serve them this holiday, choosing long-term growth opportunity over near-term impact to profitability.

Sonia continued to say:

Current pressures have not distracted us from what matters: growing our billion-dollar brands, delighting our over 64 million customers with product and experiences that drive lifetime value and restructuring and digitizing our business with an eye on creating a better future, faster.

Net sales results

The disruption of the company’s global supply chain, including continued port congestion and Covid-19-related factory closures, caused a lot of product delays in this specific quarter. Meaningfully reduced inventory positions Gap experienced throughout the third quarter of 2021 greatly affected sales as brands couldn’t fully meet the strong consumer demand. 

The company recorded $3.9 billion in net sales in the third quarter of 2021, representing a 1% decrease from what was recorded in the same quarter of 2019 when it started dealing with supply chain disruptions. Gap will still focus on trying to dominate the digital space via the investments it has made in its eComm platform. 

It reported a 48% increase in online sales, which represented about 38% of the company’s total business operations. The investments it has made in the tech space are helping improve online experiences as it continues to move forward with its digital strategy.