Shareholders of Gap Inc (NYSE:GPS) are having a rough day after the retail giant reported third-quarter results with a cautious outlook. GPS reported 3Q16 EPS of $0.60, in line with consensus of $0.60, which excludes a $0.09 negative impact associated with previously announced store closures and streamlining measures. Management reiterated 2016 EPS of $1.87–$1.92, implying a lower 4Q16 versus consensus. Management is cautious on the outlook for 4Q given a fall off in traffic throughout November and additional expenses related to occupancy for the new Times Square flagship, lapping bonus reversals LY, and additional marketing expense.
In the wake of the earning announcement, Gap shares are falling nearly 7% in pre-market trading Friday. GPS has a 1-year high of $30.74 and a 1-year low of $17. The stock’s 50-day moving average is $24.67 and its 200-day moving average is $22.29.
“I’m pleased to see improved product across our brands, as well as areas of healthier merchandise margins, even against the backdrop of challenging traffic trends during the quarter,” said Art Peck, chief executive officer, Gap Inc.
“As we move into the holiday season, our teams are sharply focused on execution and delivering great experiences across the portfolio,” Peck continued. “Looking forward, we remain dedicated to utilizing our scale advantage in supply chain, as well as through knowledge sharing, in order to drive product innovation across brands and categories.”
On the ratings front, Gap has been the subject of a number of recent research reports. In a report released today, Mizuho analyst Betty Chen reiterated a Hold rating on GPS, with a price target of $28, which reflects a potential downside of 9% from last closing price. Separately, Citigroup’s Paul Lejuez downgraded the stock today to Sell and has a price target of $25.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Betty Chen and Paul Lejuez have a yearly average loss of 5.8% and a return of 14.7% respectively. Chen has a success rate of 42% and is ranked #3880 out of 4229 analysts, while Lejuez has a success rate of 67% and is ranked #202.
Overall, 5 research analysts have rated the stock with a Sell rating, 10 research analysts have assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $25.14 which is -18.1% under where the stock closed yesterday.
Gap, Inc. operates as a global apparel retail company. It offers apparel, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Athleta, and Intermix brands. It operates through the following segments: Gap Global, Old Navy Global, Banana Republic Global, Athleta, and Intermix. The Gap Global segment includes apparel and accessories for men and women under the Gap brand, along with the GapKids, BabyGap, GapMaternity, GapBody, and GapFit collections. The Old Navy Global segment offers clothing and accessories for adults and children. The Banana Republic Global segment provides clothing, eyewear, jewelry, shoes, handbags, and fragrances. The Athleta segment offers fitness apparel for women. The Intermix segment features styles from various designers.