Gap shares tumble after cautious Q2 outlook overshadows solid first-quarter results

The institution reported first-quarter gross of $3.5 billion, up 1% twelvemonth implicit twelvemonth but somewhat beneath expert estimates of $3.53 billion.

Comparable income roseate 2%, missing the 3.1% statement estimate, though gross borderline of 40.5% exceeded the company's ain outlook.

Adjusted net per stock of $0.38 came successful conscionable up of the $0.37 estimate.

The crisp stock diminution was driven mostly by second-quarter guidance calling for nett income to beryllium level to down 1% twelvemonth implicit year, good beneath expert expectations of a 2.1% gain. For the afloat year, Gap lowered its nett income maturation forecast to 1% to 2%, from a anterior outlook of 2% to 3%, portion raising its adjusted EPS guidance to $2.30 to $2.40.

Performance varied sharply crossed the company's 4 brands. The Gap marque posted a 10% comparable income gain, its tenth consecutive affirmative quarter, driven by spot successful denim and fleece. Banana Republic roseate 2% and Old Navy gained conscionable 1%, wounded by weakness successful seasonal categories including dresses. Athleta fell 11% arsenic its turnaround effort continued to lag expectations.

Jefferies maintained a constructive semipermanent view, citing borderline subject and marque reinvigoration nether CEO Richard Dickson, portion lowering its terms people to $29. The slope flagged aboriginal investments successful quality and artificial quality arsenic imaginable longer-term maturation drivers, but cautioned that tariffs and substance costs stay near-term headwinds.

Gap ended the 4th with $2.6 cardinal successful currency and short-term investments and returned $464 cardinal to shareholders. The institution said it expects second-half betterment arsenic Old Navy's seasonal challenges easiness and halfway categories clasp steady.