Gap GPS Q1 earnings report 2023

Gap reported another quarter of net losses and declining sales across its four brands but the retailer insisted it’s making progress — and has managed to significantly improve its margins, which sent shares surging in extended trading.

Here’s how the apparel retailer did in its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

• Earnings per share: 1 cent, adjusted, vs. a loss of 16 cents, expected
• Revenue: $3.28 billion vs. $3.29 billion expected

For the three-month period that ended April 29, the company’s net loss narrowed to $18 million, or 5 cents per share, from $162 million, or 44 cents a share, in the year-earlier period. On an adjusted basis, the company reported earnings of $3 million, or 1 cent per share. 

Sales dropped to $3.28 billion, down 6% from $3.48 billion a year earlier. 

Shares jumped more than 15% in after-hours trading on the improvement in gross margins.

Gap, which includes its namesake brand, Old Navy, Banana Republic and Athleta, has been without a CEO for nearly a year as it worked to restructure the business, understand its customers better and get back to profitability. 

The retailer said that work is well underway — and acknowledged it has long been needed.

“Consistent with what you’ve heard from us over the last few quarters, we continue to take the necessary actions to drive critical change at Gap Inc., to further improve the trajectory of our business and to get us back on a path to delivering consistent results,” interim CEO Bobby Martin told investors on an earnings call.

“I understand that we have surfaced these issues before, and what I would say is simply this work has been derailed for far too long and it is imperative that we get after it in earnest,” he said.

Last month, Gap told investors it will lay off about 1,800 employees, more than three times as many as the 500 layoffs it announced in September, as part of a broad effort to cut costs and streamline operations.

Between this year and last, the company has cut 25% of its headquarters roles, which has increased the number of direct reports each manager has from two to four and reduced management layers from 12 to eight, the company said. 

The cuts remove layers of red tape and bureaucracy that will allow Gap to be more nimble in its decision-making and focused on its creative efforts, the…