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Gap pulls back forecasts as Old Navy sales falter and inventory piles up

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News Tech: Aug 25 (Reuters) – Gap Inc (GPS.N) on Thursday withdrew its annual forecasts as the apparel chain struggles to sell its outdated Old Navy items, while inventory builds up as red-hot inflation forces people to cut discretionary spending.

“Our elevated inventory and pressured margins are current realities against unsettled market conditions,” Gap interim chief executive officer Bob Martin said. read more

U.S. apparel retailers including Kohl’s Corp (KSS.N) and Abercrombie & Fitch Co have indicated they will need to offer steep discounts to offload excess casual-wear inventory. read more

Gap, which beat quarterly revenue estimates, said sales trends improved in July and August, coinciding with a drop in gas prices.

Gap, which recorded an inventory impairment charge of $58 million, said stocks at the end of the second quarter were 37% higher from a year earlier.

Overall revenue of $3.86 billion topped estimates of $3.82 billion, according to IBES data from Refinitiv, buoyed by a 9% jump in sales at the Banana Republic division which sells suits, dresses and skirts. Gap in May had forecast fiscal 2022 adjusted earnings per share between 30 cents and 60 cents and revenue to decline in low- to mid-single digit percentage.

RegisterReporting by Praveen Paramasivam in Bengaluru; Editing by Vinay Dwivedi Source: Reuters Trust Principles.

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