Popular apparel retailer Gap Inc has reported a staggering first-quarter loss of $932 million, due to the closure of its stores amid the coronavirus pandemic. The company had to write down the value of certain assets, leading to this significant loss. As a result, Gap’s shares dropped around 5% after the announcement. Non-essential goods retailers, like clothing stores, have been hit hard by the pandemic, as they were forced to shift to online operations or curbside pickups, resulting in a major decline in sales. Gap, with its headquarters in San Francisco and nearly 2,800 stores in North America, stated that 55% of its company-operated stores in the region are now open. However, the reopening hasn’t fully offset the decline in sales, which Chief Executive Officer Sonia Syngal attributed to the closures. She did mention that online sales were showing some signs of improvement.
During the first quarter, Gap reported a net loss of $932 million, equivalent to $2.51 per share. This is a significant drop from the profit of $227 million, or 60 cents per share, reported during the same period last year. The loss can be partially attributed to a $484 million writedown on store and operating lease assets, as well as a $235 million inventory impairment charge. Additionally, net sales fell by 43% to $2.11 billion compared to $3.71 billion last year.
Analysts had predicted a loss of 67 cents per share and revenue of $2.30 billion, according to IBES data from Refinitiv.
The retail industry has been severely impacted by the ongoing pandemic, with store closures and restrictions forcing companies like Gap to adapt in order to survive. Gap’s recovery efforts will be closely watched to gauge the long-term effects of the pandemic on the retail sector as a whole.