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Weakness in Old Navy, Inflation to Mar Gap's (GPS) Q2 Earnings
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The Gap, Inc. (GPS - Free Report) is scheduled to report second-quarter fiscal 2022 numbers on Aug 25. The company is likely to register declines in the top and bottom lines when it reports second-quarter fiscal 2022 results.
The Zacks Consensus Estimate for the fiscal second-quarter bottom line is pegged at a loss of 4 cents per share, suggesting a sharp decline of 105.7% from earnings of 70 cents reported in the prior-year quarter. The loss estimate for the fiscal second quarter has widened by a penny in the past 30 days. For revenues, the consensus mark is pegged at $3.82 billion, indicating a 9.3% decline from that reported in the year-ago quarter.
In the last reported quarter, the company reported a negative earnings surprise of 300.00%. The bottom line lagged the consensus mark by 52.56%, on average, in the trailing four quarters.
Key Factors to Note
Gap has been witnessing industry-wide challenges and headwinds in its Old Navy brand, including issues related to the launch of BODEQUALITY. Also, lower-than-anticipated demand in key categories like active, fleece, and kids and baby are likely to have dented the fiscal second quarter performance.
The company has been witnessing higher air freight costs. Huge discounts at Old Navy and rising commodity price increases are expected to have acted as other deterrents. On its last reported quarter’s earnings call, management anticipated a continued increase in air freight expenses, with $50 million to be incurred in the fiscal second quarter.
Gap has been witnessing longer transit times, more delays, pack-and-hold strategies, and elevated AUC and input costs. The persistence of higher inventory levels is likely to have hurt the company’s profitability in the quarter under review. Management, in its last earnings report, expected inventory to remain high in the fiscal second quarter.
However, Gap has long been gaining from the continued momentum across its Athleta brand. Strength in women’s active and wellness category, along with an increased focus on performance active as well as active lifestyle products to capitalize on the evolving shopping trends, bodes well. The company has been on track with the execution of its Power Plan 2023, focusing on store fleet optimization.
Our proven model does not conclusively predict an earnings beat for Gap this season. 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Gap has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of -140.00%.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +3.27% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2022 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.2 billion, which suggests a rise of 11.7% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s earnings has moved up 1.3% to $4.84 per share in the past 30 days. The consensus estimate indicates 6.1% growth from $4.56 reported in the year-ago quarter.
Dollar General (DG - Free Report) currently has an Earnings ESP of +0.99% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports second-quarter fiscal 2022 numbers. The consensus mark for DG’s quarterly earnings has moved up by a penny in the past seven days to $2.92 per share. The consensus estimate suggests 8.6% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Dollar General’s quarterly revenues is pegged at $9.4 billion, which suggests growth of 8.4% from the figure reported in the prior-year quarter.
Ollie's Bargain (OLLI - Free Report) currently has an Earnings ESP of +6.06% and a Zacks Rank #2. The company is expected to register a bottom-line decline when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 33 cents suggests a decline from the 52 cents reported in the year-ago quarter.
Ollie's Bargain’s top line is anticipated to have risen year over year. The consensus mark for OLLI’s revenues is pegged at $457.5 million, indicating an increase of 10% from the figure reported in the year-ago quarter.
Image: Bigstock
Weakness in Old Navy, Inflation to Mar Gap's (GPS) Q2 Earnings
The Gap, Inc. (GPS - Free Report) is scheduled to report second-quarter fiscal 2022 numbers on Aug 25. The company is likely to register declines in the top and bottom lines when it reports second-quarter fiscal 2022 results.
The Zacks Consensus Estimate for the fiscal second-quarter bottom line is pegged at a loss of 4 cents per share, suggesting a sharp decline of 105.7% from earnings of 70 cents reported in the prior-year quarter. The loss estimate for the fiscal second quarter has widened by a penny in the past 30 days. For revenues, the consensus mark is pegged at $3.82 billion, indicating a 9.3% decline from that reported in the year-ago quarter.
In the last reported quarter, the company reported a negative earnings surprise of 300.00%. The bottom line lagged the consensus mark by 52.56%, on average, in the trailing four quarters.
Key Factors to Note
Gap has been witnessing industry-wide challenges and headwinds in its Old Navy brand, including issues related to the launch of BODEQUALITY. Also, lower-than-anticipated demand in key categories like active, fleece, and kids and baby are likely to have dented the fiscal second quarter performance.
The company has been witnessing higher air freight costs. Huge discounts at Old Navy and rising commodity price increases are expected to have acted as other deterrents. On its last reported quarter’s earnings call, management anticipated a continued increase in air freight expenses, with $50 million to be incurred in the fiscal second quarter.
Gap has been witnessing longer transit times, more delays, pack-and-hold strategies, and elevated AUC and input costs. The persistence of higher inventory levels is likely to have hurt the company’s profitability in the quarter under review. Management, in its last earnings report, expected inventory to remain high in the fiscal second quarter.
However, Gap has long been gaining from the continued momentum across its Athleta brand. Strength in women’s active and wellness category, along with an increased focus on performance active as well as active lifestyle products to capitalize on the evolving shopping trends, bodes well. The company has been on track with the execution of its Power Plan 2023, focusing on store fleet optimization.
The Gap, Inc. Price and EPS Surprise
The Gap, Inc. price-eps-surprise | The Gap, Inc. Quote
Zacks Model
Our proven model does not conclusively predict an earnings beat for Gap this season. 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Gap has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of -140.00%.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +3.27% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2022 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.2 billion, which suggests a rise of 11.7% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s earnings has moved up 1.3% to $4.84 per share in the past 30 days. The consensus estimate indicates 6.1% growth from $4.56 reported in the year-ago quarter.
Dollar General (DG - Free Report) currently has an Earnings ESP of +0.99% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports second-quarter fiscal 2022 numbers. The consensus mark for DG’s quarterly earnings has moved up by a penny in the past seven days to $2.92 per share. The consensus estimate suggests 8.6% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Dollar General’s quarterly revenues is pegged at $9.4 billion, which suggests growth of 8.4% from the figure reported in the prior-year quarter.
Ollie's Bargain (OLLI - Free Report) currently has an Earnings ESP of +6.06% and a Zacks Rank #2. The company is expected to register a bottom-line decline when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 33 cents suggests a decline from the 52 cents reported in the year-ago quarter.
Ollie's Bargain’s top line is anticipated to have risen year over year. The consensus mark for OLLI’s revenues is pegged at $457.5 million, indicating an increase of 10% from the figure reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.