Gap Inc. on Tuesday blamed “significant” supply-chain constraints as it cut its full-year earnings guidance and reported third-quarter results that fell short of expectations.
“Acute supply-chain headwinds affected our ability to fully meet strong customer demand,” said Chief Executive Sonya Sengal in a statement. She said the company chose “accelerated use of air freight” to serve customers this holiday season, calling it “an intentional investment in building enduring customer loyalty.”
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Third-quarter net sales rose at the company’s Old Navy and Athleta brands compared with the same period in 2019, while decreasing at its Gap and Banana Republic brands.
The retailer reported a net loss of $152 million, or 40 cents a share, for the quarter. That’s compared with net income of $95 million, or 25 cents a share, in the year-ago period. Adjusted for debt-restructuring costs and charges related to the company’s European operating model, earnings were 27 cents a share. Revenue fell to $3.94 billion from $3.99 billion in the year-ago quarter.
Analysts surveyed by FactSet had forecast earnings of $191 million, or 50 cents a share, on revenue of $4.43 billion.
The company now expects its reported full-year diluted earnings per share to be 45 cents to 60 cents, which it said includes an estimated $550 million to $600 million in lost sales because of supply constraints, and about $450 million in air freight expenses for the year.
Gap stock has gained about 15.5% so far this year, while the S&P 500 Index SPX,