Shares of the Gap (GAP) are up 13% after the clothing retailer posted strong financial results for this year’s third quarter and raised its forward guidance.
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San Francisco-based Gap, which also owns and operates clothing brands Old Navy, Banana Republic, and Athleta reported earnings per share (EPS) of $0.72, which was ahead of the consensus forecast that called for $0.58. Revenue in the quarter totaled $3.83 billion, which topped Wall Street estimates of $3.81 billion. Sales were up 2% from a year earlier.
In terms of guidance, Gap said it now expects Fiscal 2024 sales to be up 1.5% to 2%. That’s an improvement from previous guidance that called for sales to be “up slightly” for the Fiscal year. The new guidance is also ahead of the 0.4% growth expected among analysts who track the company’s progress.
This was the third time in 2024 that Gap raised its annual guidance.
Storms and Hurricanes
Management at Gap said the strong results and raised guidance come about despite negative impacts from storms and hurricanes during the year’s third quarter. Unseasonably warm weather affected sales by about 1 percentage point during Q3, while storms and hurricanes led overall sales to fall by 2%.
Management added that preliminary data shows that the current holiday shopping season is off to a strong start across the company’s brands. Over the past year, Gap has relied on nostalgic marketing campaigns and celebrity partnerships to boost its cultural relevance and sales, which have grown for four consecutive quarters.
Before today’s (November 21) big after hours move, GAP stock had risen 8% this year.
Is GAP Stock a Buy?
Gap stock has a consensus Moderate Buy rating among 12 Wall Street analysts. That rating is based on seven Buy and five Hold recommendations assigned in the last three months. There are no Sell ratings on the stock. The average GAP price target of $28.70 implies 30% upside from current levels.
