GPS stock spiked more than 30% Friday after Gap trounced Q3 earnings views in the morning. Ross Stores broke out on its results.
Gap Earnings
Gap reported a 16.9% drop in adjusted earnings to 59 cents per share. Net sales fell 6.7% to $3.77 billion. Analysts polled by FactSet expected adjusted earnings of 20 cents per share on $3.6 billion in sales.
Comparable sales were down 2% for the quarter, driven by a 6% decline in same-store sales. Online sales decreased 8% compared to 2022.
Gap's gross margin increased 390 basis points from last year to 41.3%.
Old Navy net sales ticked down 1% to $2.13 billion while comparable sales for the business segment increased 1%. Gap brand sales were down 15% to $887 million. Excluding impacts from the sale of Gap China and the shutdown of Yeezy Gap, net sales were down about 6% from last year. Comparable sales eased 1%.
Yeezy Gap was the fashion collaboration between rapper Kanye West's Yeezy brand and Gap. Gap recorded $53 million in impairment charges for the Yeezy Gap brand in Q3 2022.
Banana Republic sales fell 11% to $460 million with an 8% drop in comparable sales. Athleta brand sales tumbled 18% to $279 million on a 19% comparable sales decline.
Inventories fell 22% to $2.38 billion.
Gap expects flat or a slight decline in net sales for Q4 from the $4.2 billion the company reported last year. Fourth-quarter 2022 sales included $90 million from Gap China.
Gap sees fiscal 2023 sales down in the mid-single digit range from the $15.6 billion recorded in 2022, which included $300 million in sales from Gap China.
FactSet analysts see Q4 earnings of 23 cents per share on $4.22 billion in sales. For 2023, analysts expect a loss of 40 cents per share on a 5% sales decline to $14.85 billion.
GPS Stock
GPS stock vaulted 30.6% Friday on the results. Shares posted their largest gain since June 26, 2020, when Gap jumped 18.8%
GPS stock rallied 58.3% this year through Friday's close.
Ross Stores
Ross reported a 33% earnings increase to $1.33 per share for its Q3 results early Friday. Net sales jumped 7.9% to $4.92 billion.
FactSet analysts expected earnings of $1.22 per share on $4.84 billion in sales.
Comparable store sales increased 5% for the period. Ross' operating margin improved to 11.2% from 9.8% last year.
"Despite the current macroeconomic and geopolitical uncertainties, we remain confident in the resilience of the off-price sector and our ability to operate successfully within it," CEO Barbara Rentler said in the release.
For the fourth quarter, Ross expects earnings to range from $1.56 to $1.62 per share, compared to $1.31 per share in 2022. The company sees Q4 comparable sales up 1% to 2%.
FactSet expects Q4 earnings of $1.62 per share on 10% sales growth to $5.74 billion.
Ross guided earnings fiscal 2023 earnings between $5.30 and $5.36 per share vs. $4.38 per share last year. Wall Street forecasts earnings of $5.34 per share while sales increase 7.5% to $20.1 billion.
ROST Stock
ROST stock rallied 7.2% Friday, closing at the top of the buy zone for a flat base. Ross closed down 3% on Thursday, about 2% below the 122.70 buy point.
Shares initially climbed above the entry on Nov. 7.
The buy zone, which extends 5% beyond the buy point, stretches to 128.83.
ROST stock surged nearly 11% this year through Friday's close.
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