Gap CEO Sonya Singal on Tuesday defended the apparel retailer’s air travel investment, telling CNBC correspondent Jim Kramer that the short-term profitability implications are worth assessing ahead of a pivotal holiday shopping season.
In an interview with Mad Money following disappointing quarterly results, Gap Syngal said the company has decided to take these costly transportation measures to overcome what turned out to be a longer-than-expected Covid shutdown in Vietnamese factories.
“We think it’s the right thing to do this during the holiday season to have the right stocks for all four of our brands, and that’s what we do,” Singal said, referring to Old Navy, Gap, Banana Republic and Athleta. …
The Gap is far from the only retailer dealing with inventory issues as global supply chains remain unsettled by factors linked to the pandemic. However, Syngal said supply restrictions are weighing on the Gap.
“About half a billion in revenue [revenue] according to her, this is due to the lack of stocks and about half a billion of time spent on air transportation, which we bear “in order for the products to be delivered to the final markets.”
Gap shares fell 16% in extended trading on Tuesday, as Wall Street reacted to the company’s weak third-quarter results and revised outlook. The gap earned an adjusted 27 cents per share compared to estimates of 50 cents, according to Refinitiv. Sales of $ 3.94 billion were below the $ 4.44 billion expected.
The company also cut its annual sales and earnings forecasts, which are now listed below, as predicted by analysts surveyed by Refinitiv.
“I’d rather have problems with supply than with demand … and that’s what we’re aiming for,” Singal said. The CEO admitted that she was “disappointed with this particular quarter,” but stressed that “everything is in the focus and support of our customers, as well as competition on vacation.”
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