Gap reports record loss

Retailer Gap booked a net loss of a record $932-million loss in Q1 as it closed 90% of all stores during the lockdown.

CNN’s Chris Isidore reported:

By far the worst quarter in the 51-year history of the Gap produced a $932 million loss for the clothing retailer, but left it on its feet.

And for a sector that has seen bankruptcies at national retailers such as JCPenney, Neiman Marcus and J.Crew, that pretty much counts as a win.

The Gap closed 90% of its stores during the quarter because of the Covid-19 pandemic, but said its reopening is ahead of schedule. Sales plunged 43% in the quarter that ended May 2, but online sales for May were double what they were a year ago.

And the company said cash-saving measures taken during the quarter left it with $1 billion in cash on hand as of May 2, a bit more than it had a year ago.

CNBC’s Lauren Thomas noted:

As of Thursday, more than 1,500 stores are back open for business in North America, Syngal said, which is about 55% of the company’s base and is ahead of schedule. Gap is planning to have most of its stores reopened this month, she said. And reopened stores are averaging sales of about 70% their normal levels, with the Old Navy brand driving that rebound, the company said. 

However, 20 of Gap’s stores have sustained “extensive damage” due to the looting that has broken out amid nationwide protests for the death of George Floyd, the CEO said during a post-earnings call with analysts. She said the company is working to get those locations back open as quickly, and safely, as possible. 

Andria Chang wrote for Forbes:

The rub isn’t the 43% decline in first-quarter sales Gap Inc. GPS reported Thursday after it shut about 90% of its global store fleet because of the coronavirus. 

Gap’s eponymous brand, the second-largest unit, accounting for 28% of the company’s $16 billion in sales last year, posted a 64% slide in brick-and-mortar store sales.

But here’s the contrast. While Old Navy and the company’s much smaller Athleta chain saw declining physical-store sales, online demand for each of them shot up, a familiar pattern seen in the results of other apparel retailers including American Eagle Outfitters AEO, Abercrombie & Fitch ANF and Urban Outfitters URBN.