Why Gap Inc’s Shares Rose Despite Earnings Miss?

-26.81%
Downside
24.69
Market
18.07
Trefis
GPS: Gap logo
GPS
Gap

  • Gap Inc’s shares have been up almost 5% since its earnings release, despite the company missing estimates
  • This can be attributed to the retailer’s plan to discontinue Old Navy in Japan in the wake of dismal international results

GPS earnings part 1

  • The metrics below indicate that this indeed is a sensible move, even though it may not appear so from the outside

GPS earnings old navy

  • Even though contribution of Old Navy’s Asian revenues in Gap Inc’s international revenues has increased over the past year, the brand’s stores outside Asia generate almost twice as much revenue per store as they do in Asia
  • Also, Old Navy’s revenue per store in Asia has fallen faster than other regions, which explains why the company has decided to close the Japan chapter of its Old Navy business
Relevant Articles
  1. Does Gap Stock Have More Room To Run After Rising 67% This Year?
  2. Gap Q2 Earnings: What Are We Watching?
  3. Gap Stock Has Upside Potential To Its Pre-Inflation Peak
  4. Gap’s Stock Looks Expensive At $14
  5. Will Gap Stock Trade Lower Post Q3 Results?
  6. Gap’s Q2 Earnings Preview: What Are We Watching?

Have more questions about Gap Inc? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Gap Inc
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