Gap Inc. (NYSE:GPS) stock declined 8.2% on Thursday’s extended trade after it reported mixed results for the fourth quarter of Fiscal Year 2022. The quarterly performance was impacted by a slowdown in discretionary consumer spending due to the high inflationary environment.
The global retail company offers apparel, accessories, and personal care products for men, women, and children.
The company reported an adjusted loss of $0.40 per share, lower than the Street’s expectations of a loss of $0.46. The figure, however, compared unfavorably with a loss of $0.02 per share in the prior-year quarter.
Meanwhile, revenue fell 6% year-over-year to $4.24 billion, missing the consensus estimate of $4.36 billion. In the reported quarter, comparable and store sales were down 5% and 3%, respectively, year-over-year, with online sales decreasing by 10%.
Gap witnessed softness in the Kids and Baby category, along with the Outerwear and Sweaters category. Nevertheless, the company benefitted from strength in the Women’s category.
Alongside earnings, Gap announced plans to streamline management in order to enable a faster decision-making process and improve efficiency. The company expects to save $300 million annually with these actions, half of which is likely to be realized in the second half of Fiscal 2023.
Outlook
The company expects fiscal first-quarter net sales to decline in the mid-single digit range from the last year’s quarter. The decrease is primarily due to the sale of Gap China to Baozun, which closed on January 31, 2023.
Furthermore, the company anticipates that Fiscal 2023 net sales could decrease in the low-to mid-single-digit range compared to net sales in Fiscal 2022.
Will Gap Stock Go Up?
On TipRanks, GPS stock has an average price target of $12.60, which implies 8.8% upside potential from the current level. Also, based on one Buy, three Hold, and two Sell ratings assigned in the past three months, Gap has a Hold consensus rating. The stock is up about 2.2% so far this year.
