Gap Sees Stock Rise Despite ‘Muted’ Sales Report

Gap store

Gap saw its stock rise late Thursday (March 3) after the clothing retailer presented a positive profit picture for the year ahead, despite “muted” sales caused by store closures and supply chain issues.

Presenting its fourth-quarter results, the company — which also owns Old Navy and Banana Republic — said it expects its shipping issues to improve.

“In order to meet demand, we utilize significant air freight to deliver as much of holiday product as we could. As a result, sales were muted and profits pressured,” CEO Sonia Syngal said during a conference call with investors. “While Q1 will have moderate product delays that necessitated air freight as a result of the aforementioned actions, our summer and go-forward deliveries are expected to be more on time and require only modest more normalized air.”

Read more: Gap Leans on Multi-Brand Approach to Weather Supply Chain Issues

The company reported a fourth-quarter loss of $16 million on sales of $4.53 billion, up from $4.42 billion during 2020’s holiday season.

The company news release quotes Syngal as saying Gap is addressing “near-term disruption from the acute headwinds that muted our fourth quarter performance” while also capitalizing on investments in demand-generation, customer loyalty and artificial intelligence.

The company says Old Navy saw its fourth quarter net sales muted in part due to supply chain impacts, up two percent versus 2019.

This is in keeping with what the company predicted in November of 2021, when supply chain issues were far more severe.

Gap’s flagship store and Banana Republic both saw sales decline in part due to store closures.

And Athleta — Gap’s performance apparel brand — saw its fourth-quarter sales rise 52%, with the label expected to hit $2 billion in net sales by fiscal year 2023.

Gap says it plans to open about 30 to 40 stores each for Old Navy and Athleta during fiscal year 2022. In keeping with the company’s 350-store closure plan, the company expects to close between 50 and 60 Gap and Banana Republic locations in North America during the same time.