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Brand Power & Online Strength to Aid Gap's (GPS) Q2 Earnings
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The Gap, Inc. (GPS - Free Report) is scheduled to report second-quarter fiscal 2021 numbers on Aug 26, after market close. The premier international clothing and accessories retailer is expected to have registered top and bottom-line growth in second-quarter fiscal 2021.
The Zacks Consensus Estimate for the fiscal second quarter is pegged at 46 cents, suggesting a sharp improvement from a loss of 5 cents reported in the prior-year quarter. The consensus mark has witnessed a positive revision of 5 cents in the past seven days. For revenues, the consensus mark is pegged at $4.15 billion, indicating growth of 26.8% from the figure reported in the year-ago quarter.
In the last reported quarter, the company reported an earnings surprise of 2,500%. The bottom line also beat the consensus mark by 659.4%, on average, in the trailing four quarters.
Gap has been gaining from strength in its Old Navy and Athleta brands, growth in the Gap business in North America, and market share gains on robust business trends in the apparel industry. The reopening of the majority of stores and continued strength in the online business are also expected to have contributed to its fiscal second-quarter sales. The company’s results are likely to reflect gains from improved margins as a result of lower rent and occupancy costs.
Despite the reopening of stores, the company continued to witness strength in the online business, which is likely to have continued in the quarter under review. Gains from its e-commerce business have been contributing significantly to its Gap, Old Navy and Athleta brands. Gap’s online business has also been benefiting from expanded omni-channel capabilities, the launch of its native Android app, alternate payment options, including PayPal and AfterPay, and increased focus on its mobile platform.
Gap’s powerhouse brand, Old Navy has been witnessing a significant acceleration in the digital business on robust customer demand as well as relevant digital marketing investments. Continued momentum in casual and cozy categories, sturdy performance in active and fleece, and a rebound in seasonal categories have been acting as upsides for the Old Navy brand.
The company’s Athleta brand also remains well-poised for robust top-line growth, on the back of digital marketing investments and focus on product strategy. The launch of inclusive sizing, gains in relevant categories, enhanced marketing efforts and partnership with Simone Biles also bode well for Athleta.
However, the company has been witnessing higher marketing and shipping expenses for fulfilling increased online orders. On its last reported quarter’s earnings call, management expected SG&A spend, as a percentage of sales, to rise in the second quarter of fiscal 2021 on a sequential basis due to heavy investments in marketing and digital assets to drive market share during the important back-to-school season. Also, loss of in-store sales, led by permanent closures of the Gap and Banana Republic brand stores, is expected to have been concerning.
Zacks Model
Our proven model conclusively predicts an earnings beat for Gap this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Gap has a Zacks Rank #1 and an Earnings ESP of +9.12%.
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat.
Image: Bigstock
Brand Power & Online Strength to Aid Gap's (GPS) Q2 Earnings
The Gap, Inc. (GPS - Free Report) is scheduled to report second-quarter fiscal 2021 numbers on Aug 26, after market close. The premier international clothing and accessories retailer is expected to have registered top and bottom-line growth in second-quarter fiscal 2021.
The Zacks Consensus Estimate for the fiscal second quarter is pegged at 46 cents, suggesting a sharp improvement from a loss of 5 cents reported in the prior-year quarter. The consensus mark has witnessed a positive revision of 5 cents in the past seven days. For revenues, the consensus mark is pegged at $4.15 billion, indicating growth of 26.8% from the figure reported in the year-ago quarter.
In the last reported quarter, the company reported an earnings surprise of 2,500%. The bottom line also beat the consensus mark by 659.4%, on average, in the trailing four quarters.
The Gap, Inc. Price and EPS Surprise
The Gap, Inc. price-eps-surprise | The Gap, Inc. Quote
Key Factors to Note
Gap has been gaining from strength in its Old Navy and Athleta brands, growth in the Gap business in North America, and market share gains on robust business trends in the apparel industry. The reopening of the majority of stores and continued strength in the online business are also expected to have contributed to its fiscal second-quarter sales. The company’s results are likely to reflect gains from improved margins as a result of lower rent and occupancy costs.
Despite the reopening of stores, the company continued to witness strength in the online business, which is likely to have continued in the quarter under review. Gains from its e-commerce business have been contributing significantly to its Gap, Old Navy and Athleta brands. Gap’s online business has also been benefiting from expanded omni-channel capabilities, the launch of its native Android app, alternate payment options, including PayPal and AfterPay, and increased focus on its mobile platform.
Gap’s powerhouse brand, Old Navy has been witnessing a significant acceleration in the digital business on robust customer demand as well as relevant digital marketing investments. Continued momentum in casual and cozy categories, sturdy performance in active and fleece, and a rebound in seasonal categories have been acting as upsides for the Old Navy brand.
The company’s Athleta brand also remains well-poised for robust top-line growth, on the back of digital marketing investments and focus on product strategy. The launch of inclusive sizing, gains in relevant categories, enhanced marketing efforts and partnership with Simone Biles also bode well for Athleta.
However, the company has been witnessing higher marketing and shipping expenses for fulfilling increased online orders. On its last reported quarter’s earnings call, management expected SG&A spend, as a percentage of sales, to rise in the second quarter of fiscal 2021 on a sequential basis due to heavy investments in marketing and digital assets to drive market share during the important back-to-school season. Also, loss of in-store sales, led by permanent closures of the Gap and Banana Republic brand stores, is expected to have been concerning.
Zacks Model
Our proven model conclusively predicts an earnings beat for Gap this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Gap has a Zacks Rank #1 and an Earnings ESP of +9.12%.
Other Stocks Poised to Beat Earnings Estimates
Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat.
Abercrombie & Fitch (ANF - Free Report) has an Earnings ESP of +6.14% and it sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DICK’S Sporting Goods, Inc. (DKS - Free Report) has an Earnings ESP of +3.59% and it currently flaunts a Zacks Rank #1.
American Eagle Outfitters, Inc. (AEO - Free Report) currently has an Earnings ESP of +1.44% and a Zacks Rank #2.