Here’s the Reason Why the Gap, Inc. (GPS) Stock is Plunging in Aftermarket

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The Gap, Inc. (GPS), an apparel retail company, has plunged 16.21% in aftermarket trading session. As a result, GPS stock is trading at $19.70 at the time of the writing. The dip is attributable to the announcement of quarterly results by the company. On Tuesday, GPS stock closed the day at $23.51 after declining 1.80% during regular trading hours.

Why GPS Dipping?

On Tuesday, GPS released the financial results for the third quarter of the fiscal year 2021. The quarter ended on 30th October 2021. The company had cash and cash equivalents of $801 million on 30th October 2021. The net sales by the company during the period were $3.94 billion against $3.99 billion for the same period of 2020. The total operating expenses for the period were $1.5 billion against $1.44 billion for the same period of 2020. The company suffered a net loss of $152 million during the quarter against the net income of $95 million for the same quarter of 2020. The loss per basic and diluted share for the quarter was $0.40 against the income per share of $0.25 for the same quarter of 2020.

Outlook for Fiscal 2021

Alongside the financial results, GPS also released the outlook for the full year 2021. The company has said that the adjusted diluted earnings per share for the full year 2021 to be in the range of $1.25 to $1.40. The lost sales of $550 million to $650 million are also included in the outlook based on the supply chain constraints. The company has also included $450 million of total air freight expenses for the year. The company expects that the reported operating margin for the fiscal year 2021 to be 4.5%.

Executive Commentary

Katrina O’Connell, Executive Vice President and Chief Financial Officer of GPS, while commenting on the results said that while there is still hard work to be done to navigate the near term challenges in the macro-environment, the company has made tremendous progress, as evident from the quick adaptation in different domains. She further said that the company has a strong demand for its brand and its fleet’s rationalization and divestitures are progressing well and adding value in this regard.

What’s Ahead for GPS Stock?

A closer look a statistics reveals that GPS stock has not endured much volatility during the last 12 month period. That is a good sign, keeping in view the impacts pandemic has imparted its influence on the market. Analysts have advised potential investors to keep a close eye on the fluctuations of GPS stock to make informed decisions regarding their investments.

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