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Gap Inc (NYSE:GPS) shares soared more than 7% after-hours following the company’s reported Q2 results, with EPS of $0.08 coming in better than the consensus estimate of ($0.05). Revenue declined 8% year-over-year to $3.86 billion, compared to the consensus estimate of $3.82 billion.
Comparable sales dropped 10% year-over-year. Online sales, which represent 34% of total sales, declined 6% year-over-year. Store sales were down 10% year-over-year.
“We are taking actions to better optimize profitability and cash flow in the near term, reducing operating costs as well as impairing unproductive inventory. While our elevated inventory and pressured margins are current realities against unsettled market conditions, they do not define our ability to capitalize on Gap Inc.’s strengths to win,” said Bob Martin, Executive Chairman and Interim CEO of Gap Inc.
The company withdrew its prior full 2022-year outlook, given the actions it has underway and in midst of a CEO transition, combined with the uncertain macro-environment.
The company noted improvement in sales trends in July and into August, coming off of peak inflation and the higher gas prices particularly impacting the lower-income consumer in June. The company said it remains cautiously optimistic in light of the consumer environment as it relates to its revenue in H2/2022.
