Gap Shares Fall After Company Reports Earnings and Misses on Both Lines

Shares of Gap were down 11% in after hours-trading on Thursday, after reporting first quarter earnings and missing expectations. According to CEO Art Peck, the quarter was “extremely challenging.”

Wall Street also wasn’t thrilled to learn that the company has cut its annual profit outlook.

The apparel retailer reported quarterly earnings and sales that missed expectations and CEO Peck remarked that he is “not at all satisfied” with the results. “We are committed to improving our execution and performance this year,” he assured.

Peck cited that the quarter was one of the “coldest, wettest quarters in memory” for the poor results. He also added that business was “extremely slow” in February.

For the first quarter, Gap reported adjusted EPS of $0.24 while $0.32 was expected. Revenues at $3.71 billion were also behind the $3.77 billion that was expected. Same-store sales saw a drop of 4% while only a drop of 1.1% was expected.

Looking ahead, the company slashed its annual profit outlook and now expects adjusted earnings per share to fall within a range of $2.05 to $2.15 this year. This is compared with a prior range of $2.40 to $2.55. Gap has also projected that company-wide same-store sales will be down low single digits in fiscal 2019.

The company additionally is aiming to shut 130 Gap-branded stores in the fiscal fourth quarter.

Peck assured that he “remain[s] confident in our plan to separate into two independently traded public companies.”

As far as the Chinese tariffs are concerned, “We’ve been migrating sourcing out of China for the last several years and we’ll continue to do this responsibly going forward,” Peck said.

Disclaimer: We have no position in Gap Inc. (NYSE: GPS) and have not been compensated for this article.