Gap Inc., the San Francisco-based retailer, has reported a net loss of $152 million for the third quarter of 2021. The company has been grappling with ongoing supply chain disruptions, leading to lower sales compared to the same period last year.

During the third quarter, Gap’s net sales totaled $3.94 billion, a slight decline of 1.3% compared to the previous year. This also marked a decrease of 1.4% from the third quarter of 2019, the last pre-pandemic third quarter. The company stated that its Old Navy brand was particularly affected by the supply chain disruptions, resulting in a 9% year-over-year drop in comparable sales. However, when compared to the third quarter of 2019, Old Navy’s comparable sales saw a 6% increase.

On the other hand, Gap’s flagship brand experienced a 7% year-over-year increase in comparable sales and a 3% increase compared to the third quarter of 2019. Banana Republic saw a significant growth of 28% in comparable sales compared to the third quarter of 2020, but a 10% decline from two years ago. Athleta, another brand under Gap Inc., had a 2% rise in comparable sales compared to the previous year and an impressive 41% increase from the third quarter of 2019.

Gap CEO Sonia Syngal acknowledged that supply chain challenges affected their ability to meet customer demand during the third quarter. In response, the company made investments in building long-term customer loyalty, including accelerating the use of air freight to serve customers during the holiday season. This decision prioritizes future growth opportunities over short-term profitability.

For the year to date, Gap’s sales reached $12.15 billion, a significant 22.8% increase compared to the same period last year. It also represents a 3.6% rise from two years ago. Net income for the nine-month period was $272 million, a significant improvement compared to a loss of $899 million during the same period last year.

Looking ahead, Gap has revised its full-year financial outlook to account for ongoing supply chain difficulties. The company now expects annual diluted earnings per share to be in the range of $0.45 to $0.60 in 2021. This includes an estimated $550 million to $650 million in lost sales due to the disruptions, as well as approximately $450 million in air freight expenses incurred to navigate these challenges. Full-year net sales are expected to increase by around 20% compared to 2020, a decrease from the previously anticipated 30% increase.

As of October, Gap operates 3,459 stores globally.

Sources:
Gap Inc. Press Release
Reuters