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Gap forecasts return to sales growth in 2021, sending shares higher despite sales miss

Gap Inc. is calling for a bounce back to sales growth in 2021, hopeful that customers will soon return to its stores and spend more money on apparel.

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A man walks past a store on January 12, 2021 in New York City.

Angela Weiss | AFP | Getty Images

Gap Inc. on Thursday predicted a bounce back to sales growth in 2021, hopeful that customers will soon return to its stores and spend more money on apparel as they look to resume some social activities.

Its shares shot up more than 4% in after-hours trading.

The apparel maker reported fourth-quarter sales that came up short of estimates, as the ongoing coronavirus pandemic forced temporary store closures in Europe, parts of Asia and Canada. But it swung to a profit, thanks to its efforts to sell more merchandise at full price and progress it made shuttering underperforming stores.

It showed continued strength at its Old Navy and Athleta brands, which focus on basics and workout gear. But its namesake Gap brand and Banana Republic label reported another quarter of sales declines.

For the quarter ended Jan. 30, Gap reported net income of $234 million, or 61 cents per share, compared with a loss of $184 million, or 49 cents per share, a year earlier.

Earnings in the latest period included a tax gain of roughly 45 cents per share and an impairment charge of roughly 12 cents per share related to Gap’s Intermix business. Analysts had been calling for earnings of 18 cents per share, according to a survey by Refinitiv. It wasn’t immediately clear if analysts had factored in the impact of these items.

Net sales fell about 5% to $4.42 billion from $4.67 billion a year earlier. That was short of analysts’ estimates of $4.66 billion.

Same-store sales for Gap’s athletic apparel brand Athleta grew 26% year over year, and they were up 7% at Old Navy. Gap’s namesake brand, however, booked a 6% same-store sales decline, and Banana Republic said that metric fell 22%. Same-store sales are a key metric for retailers that track performance online and at stores open for at least a year.

Gap said its overall online sales were up 49%, representing 46% of net sales during the quarter.

For fiscal 2021, the company is calling for net sales to be up a mid- to high-teens percentage compared with 2020. That’s assuming Covid-related impacts continue in the first half of 2021, and the retailer returns to a more normalized, pre-pandemic level of sales in the second half of the year, the company said.

Analysts had been calling for year-over-year revenue growth of 14.1%, according to Refinitiv.

Gap is forecasting earnings to be in the range of $1.20 to $1.35 per share. Analysts had been anticipating earnings of $1.28 per share.

One constraint, however, continues to be backlogged U.S. ports that are causing inventory to be stuck in transit for longer periods of time. Gap said the port congestion is expected to continue through the first half of the year. Therefore, it expects inventory levels to remain elevated into the second quarter, up high single digits compared with a year earlier.

Gap said it plans to open 30 to 40 Old Navy stores along with 20 to 30 Athleta stores this year and it will close about 100 Gap and Banana Republic stores globally.

Gap shares are up about 75% over the past 12 months. The company has a market cap of $9.46 billion.

Find the full press release from Gap here.

Its shares shot up more than 4% in after-hours trading.

Source: https://www.cnbc.com/2021/03/04/gap-gps-reports-q4-2020-earnings.html

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Source: https://www.cnbc.com/earnings/

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Stitch Fix shares surge as online styling service reports surprise profit

Stitch Fix shares jumped after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

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The Stitch Fix application for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Stitch Fix shares jumped 14% in extended trading Tuesday after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Consumers have been splurging on new outfits in recent months, as many head back to school and return to social gatherings. Some have also citied the need for new clothes after either gaining or losing weight during the Covid pandemic.

Here’s how Stitch Fix did compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 19 cents vs. a loss of 13 cents expected
  • Revenue: $571.2 million vs. $548 million expected

Net income attributable to shareholders was $28 million, or 19 cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a share. Analysts had been looking for the company to book a loss of 13 cents per share.

Revenue grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’ expectations for $548 million.

Stitch Fix reported nearly 4.2 million active clients, up 18% from a year earlier. The company said net revenue per active client was $505, surpassing the $500 threshold for the first time ever. Customers have been purchasing more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.

Stitch Fix defines active clients as people who either ordered a “Fix” subscription or bought an item directly from its website in the preceding 52 weeks from the final day of the quarter.

The company also said it had its lowest ever churn rate at the end of the period, meaning its customers are sticking around.

Last month, Stitch Fix finally opened up its direct-buy option, which is now known as “Freestyle,” to the public. This allows people to shop Stitch Fix for individual items of clothing, without needing to sign up for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the year ahead. The company’s next initiative will be to market and raise broader awareness around the offering, she said. Stitch Fix is preparing to roll out a national advertising campaign on the debut.

Early indications are that “Freestyle” is meaningfully accretive to the company’s revenue per active client metric, Spaulding told analysts on a conference call.

“Clients have agency, flexibility and choice while also experiencing a highly personalized shopping experience,” Spaulding said.

For its fiscal first quarter, Stitch Fix said it sees sales in a range of $560 million to $575 million. That’s below analysts’ expectations for $588 million.

For the upcoming fiscal year, Stitch Fix anticipates sales rising 15% or more from the prior year. Analysts polled by Refinitiv had been looking for an 18% increase.

While the entire retail industry is working through supply chain complications, Stitch Fix said it is seeing a small impact, but nothing that will hurt the business in the fall and winter months. The company said it is less reliant on Vietnam, where manufacturing has largely come to a standstill due to ongoing pandemic lockdowns in the region.

As of Tuesday’s market close, Stitch Fix shares have fallen nearly 39% this year. The company has a market cap of $3.8 billion.

Find the full press release from Stitch Fix here.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Source: https://www.cnbc.com/2021/09/21/stitch-fix-sfix-q4-2021-earnings.html

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Earnings

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© 2021 CNBC LLC. All Rights Reserved. A Division of NBCUniversal

Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

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Source: https://www.cnbc.com/earnings/

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