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Momentum In Apparel Sale Prompted Gap To Raise 2021 Forecasts

Momentum In Apparel Sale Prompted Gap To Raise 2021 Forecasts
The San Francisco-based retailer Gap Inc now expects to see a continued increase in demand for new apparel with more people stepping out of their homes and socializing once again following a year when most were forced to stay back home because of the Covid-19 pandemic. This prompted the retailer to raise its forecast for annual sales and profit for the current year.
There has been an almost 75 surge in the stock price of the San Francisco-based retailer and it rose by 2 per cent after the company made the announcement on Thursday and reported a profit for the first quarter.
Following the hit to its business at the peak of the health crisis last year which was preceded by years of weak sales because of severe competition and a shift of consumers online shopping, Gap is reaping the benefits of a quarter that is being viewed as a boom quarter for the retail sector.
Celebrity partnerships, including those with rapper Kanye West's Yeezy and Olympic gymnast Simone Biles, as well as a focus on online selling are the two strategies that the company’s Chief Executive Officer Sonia Syngal has worked on for the revival of the company's brands since last year's low.
"We saw a resurgence in summer fashion with dresses rebounding, showing that customers are emerging from the crisis wanting to express their style," Syngal said.
Even with the physical stores of the company reopening, Syngal still expects the current trend of digital sales to continue while also expecting sustained growth in demand for active and fleece apparel because consumers will be looking for comfort and convenience.
The company forecast growth in its net sales to be in the low-to-mid 20 per cent range compared to year earlier where as it had previously projected growth to be in the mid-to-high teens.
According to IBES data from Refinitiv, analysts were forecasting sales growth of 17.8 per cent for the current year.
The company expects its diluted earnings to be between $1.55 and $1.70 per share for the year compared to its previous forecast of $1.20 to $1.35.
There was an 89 per cent year on year surge in the company’s net sales in the first quarter to $3.99 billion which beat estimates of analysts of $3.45 billion. The company’s net income for its latest completed quarter was at $166 million compared with a loss of $932 million. On an adjusted basis, Gap earned 48 cents per share.

Christopher J. Mitchell

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