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Here's Why Gap (GPS) Looks Poised to Beat on Earnings in Q4
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The Gap, Inc. (GPS - Free Report) is scheduled to report fourth-quarter fiscal 2022 numbers on Mar 9. The company is likely to register declines in the top and bottom lines when it reports fourth-quarter fiscal 2022 results.
The Zacks Consensus Estimate for the fiscal fourth-quarter bottom line is pegged at a loss of 59 cents per share compared with a loss of 2 cents reported in the prior-year quarter. The consensus loss estimate for the fiscal fourth quarter has narrowed by a couple of cents in the past 30 days. For revenues, the consensus mark is pegged at $4.3 billion, indicating a 4.4% decline from that reported in the year-ago quarter.
For fiscal 2022, the consensus mark for the bottom line is pegged at a loss of 22 cents, suggesting a decline from earnings of $1.44 per share reported in the year-ago quarter. The consensus mark has narrowed by a couple of cents in the past 30 days. The Zacks Consensus Estimate for the company’s fiscal 2022 revenues is pegged at $15.7 billion, suggesting a 5.8% decline from the prior-year quarter’s reported figure.
We expect the company’s fiscal fourth-quarter total revenues to decline 5.1% year over year to $4,293.6 million. We also expect the company to report a loss of 75 cents per share, whereas it reported a loss of 2 cents in the prior-year quarter. For fiscal 2022, we estimate revenues to decline 6% to $15,666.6 million, with a loss per share of 40 cents, whereas it reported earnings of $1.44 in the prior year.
In the last reported quarter, Gap’s earnings surpassed the Zacks Consensus Estimate by 3,650%. The company delivered an earnings surprise of 933.9%, on average, in the trailing four quarters.
Gap’s fiscal fourth-quarter performance is expected to have gained from sturdy demand and strength in the Athleta brand. The company has been witnessing strong demand for formal clothing and dresses, as people have been preferring more formal clothing, dresses, woven tops and pants, and shelving casual wear as they return to travel, work and social occasions after two years of the pandemic.
Continued momentum across its Athleta brand has been acting as a key growth driver for long. The Athleta brand’s value-driven active and lifestyle categories, increased digital marketing investments, and focus on product strategy have been aiding sales. Increased focus on performance active, as well as active lifestyle products to capitalize on the evolving shopping trends, bodes well.
The company has been aggressively undertaking cost-management actions, which is expected to have improved its performance in the to-be-reported quarter. Some notable efforts were the elimination of 500 existing and open positions in its corporate offices, a hiring freeze, a pause on contractor spend, the renegotiation of advertising agency contracts, reduced technology and operating costs, and rationalized investments. These endeavors are likely to help offset higher incentive compensation and rising labor costs.
However, Gap has been witnessing longer transit times, more delays, pack-and-hold strategies, and elevated levels of slow-turning basics and seasonal products.
On the last reported quarter’s earnings call, management expected inventory to remain high in the fiscal fourth quarter due to remaining fall products despite higher markdowns in the fiscal third quarter. Huge discounts and elevated commodity prices are likely to have continued weighing on margins in the fiscal fourth quarter.
On its last reported quarter’s earnings call, management expected sales to decline year over year in the mid-single digits in the fourth quarter of fiscal 2022, resulting from the continued uncertain consumer environment and higher promotions. The company also raised concerns about a drab holiday season this year. Also, rising prices of essential commodities are likely to continue to hurt lower-income consumers' spending on non-essentials like apparel.
Zacks Model
Our proven model conclusively predicts 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Gap has a Zacks Rank #3 and an Earnings ESP of +25.06%.
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:
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +8.53% and a Zacks Rank of 2. The company is likely to register growth in the top and bottom lines when it reports fourth-quarter fiscal 2022 numbers. The consensus mark for ULTA’s quarterly earnings has moved up 0.9% in the past 30 days to $5.53 per share. The consensus estimate suggests 2.2% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Ulta Beauty’s quarterly revenues is pegged at $3.01 billion, which suggests growth of 10.3% from the figure reported in the prior-year quarter.
DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +1.67% and a Zacks Rank of 3. The company is likely to register an increase in the top line when it reports fourth-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.41 billion, which suggests a rise of 1.7% from the figure reported in the prior-year quarter.
DICK’S bottom line is expected to decline year over year. The consensus mark for DKS’ quarterly earnings has moved down by a penny in the past 30 days to $2.86 per share. The consensus estimate suggests a 21.4% decline from the year-ago quarter’s reported number.
Foot Locker (FL - Free Report) currently has an Earnings ESP of +3.03% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports fourth-quarter fiscal 2022 results. The consensus mark for FL’s quarterly revenues is pegged at $2.2 billion, which suggests an 8.3% decline from the figure reported in the prior-year quarter.
The consensus mark for FL’s quarterly earnings has been unchanged in the past 30 days at 51 cents per share. The consensus estimate suggests a decline of 69.5% from the year-ago quarter’s reported number.
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Here's Why Gap (GPS) Looks Poised to Beat on Earnings in Q4
The Gap, Inc. (GPS - Free Report) is scheduled to report fourth-quarter fiscal 2022 numbers on Mar 9. The company is likely to register declines in the top and bottom lines when it reports fourth-quarter fiscal 2022 results.
The Zacks Consensus Estimate for the fiscal fourth-quarter bottom line is pegged at a loss of 59 cents per share compared with a loss of 2 cents reported in the prior-year quarter. The consensus loss estimate for the fiscal fourth quarter has narrowed by a couple of cents in the past 30 days. For revenues, the consensus mark is pegged at $4.3 billion, indicating a 4.4% decline from that reported in the year-ago quarter.
For fiscal 2022, the consensus mark for the bottom line is pegged at a loss of 22 cents, suggesting a decline from earnings of $1.44 per share reported in the year-ago quarter. The consensus mark has narrowed by a couple of cents in the past 30 days. The Zacks Consensus Estimate for the company’s fiscal 2022 revenues is pegged at $15.7 billion, suggesting a 5.8% decline from the prior-year quarter’s reported figure.
We expect the company’s fiscal fourth-quarter total revenues to decline 5.1% year over year to $4,293.6 million. We also expect the company to report a loss of 75 cents per share, whereas it reported a loss of 2 cents in the prior-year quarter. For fiscal 2022, we estimate revenues to decline 6% to $15,666.6 million, with a loss per share of 40 cents, whereas it reported earnings of $1.44 in the prior year.
In the last reported quarter, Gap’s earnings surpassed the Zacks Consensus Estimate by 3,650%. The company delivered an earnings surprise of 933.9%, 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’s fiscal fourth-quarter performance is expected to have gained from sturdy demand and strength in the Athleta brand. The company has been witnessing strong demand for formal clothing and dresses, as people have been preferring more formal clothing, dresses, woven tops and pants, and shelving casual wear as they return to travel, work and social occasions after two years of the pandemic.
Continued momentum across its Athleta brand has been acting as a key growth driver for long. The Athleta brand’s value-driven active and lifestyle categories, increased digital marketing investments, and focus on product strategy have been aiding sales. Increased focus on performance active, as well as active lifestyle products to capitalize on the evolving shopping trends, bodes well.
The company has been aggressively undertaking cost-management actions, which is expected to have improved its performance in the to-be-reported quarter. Some notable efforts were the elimination of 500 existing and open positions in its corporate offices, a hiring freeze, a pause on contractor spend, the renegotiation of advertising agency contracts, reduced technology and operating costs, and rationalized investments. These endeavors are likely to help offset higher incentive compensation and rising labor costs.
However, Gap has been witnessing longer transit times, more delays, pack-and-hold strategies, and elevated levels of slow-turning basics and seasonal products.
On the last reported quarter’s earnings call, management expected inventory to remain high in the fiscal fourth quarter due to remaining fall products despite higher markdowns in the fiscal third quarter. Huge discounts and elevated commodity prices are likely to have continued weighing on margins in the fiscal fourth quarter.
On its last reported quarter’s earnings call, management expected sales to decline year over year in the mid-single digits in the fourth quarter of fiscal 2022, resulting from the continued uncertain consumer environment and higher promotions. The company also raised concerns about a drab holiday season this year. Also, rising prices of essential commodities are likely to continue to hurt lower-income consumers' spending on non-essentials like apparel.
Zacks Model
Our proven model conclusively predicts 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Gap has a Zacks Rank #3 and an Earnings ESP of +25.06%.
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:
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +8.53% and a Zacks Rank of 2. The company is likely to register growth in the top and bottom lines when it reports fourth-quarter fiscal 2022 numbers. The consensus mark for ULTA’s quarterly earnings has moved up 0.9% in the past 30 days to $5.53 per share. The consensus estimate suggests 2.2% growth from the year-ago quarter’s reported number.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s quarterly revenues is pegged at $3.01 billion, which suggests growth of 10.3% from the figure reported in the prior-year quarter.
DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +1.67% and a Zacks Rank of 3. The company is likely to register an increase in the top line when it reports fourth-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.41 billion, which suggests a rise of 1.7% from the figure reported in the prior-year quarter.
DICK’S bottom line is expected to decline year over year. The consensus mark for DKS’ quarterly earnings has moved down by a penny in the past 30 days to $2.86 per share. The consensus estimate suggests a 21.4% decline from the year-ago quarter’s reported number.
Foot Locker (FL - Free Report) currently has an Earnings ESP of +3.03% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports fourth-quarter fiscal 2022 results. The consensus mark for FL’s quarterly revenues is pegged at $2.2 billion, which suggests an 8.3% decline from the figure reported in the prior-year quarter.
The consensus mark for FL’s quarterly earnings has been unchanged in the past 30 days at 51 cents per share. The consensus estimate suggests a decline of 69.5% from the year-ago quarter’s reported number.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.