Well-known retailers Gap and Nordstrom both saw their quarterly results suffer and their share price hit by supply-chain disruptions even as consumers reenter their physical stores.
GAP INC.
Gap (NYSE:GPS) reported net sales of $3.9 billion for the quarter ended October 30, missing the $4.43 billion that analysts desired.
The company said its brands could not meet strong demand from shoppers as continued fallout from Covid-19 outbreaks led to factory closures and clogged reports.
Shares dropped 17% in after-hours trading after it failed to meet expectations and slashed its full-year outlook. The firm reported a net loss of $152 million, or 40 cents a share, for the quarter.
Supply-chain disruptions in the quarter slashed an estimated $300 million in lost sales and added $100 million in airfreight costs.
“While we entered the third quarter with growing momentum, acute supply chain headwinds affected our ability to meet strong consumer demand.” – Chief Executive Sonja Syngal
NORDSTROM
Gap isn’t the only retailer suffering. Nordstrom (NYSE:JWN) stocks fell 23% in after-hours trading on Tuesday after reporting its third-quarter earnings.
Despite the stronger-than-expected sales, earnings were only 39 cents per share, missing the expected 57 cents by a large margin. However, the company expects total revenue to rise more than 35% from fiscal 2020, reiterating its full-year outlook.
Operating costs jumped during higher labor and fulfillment costs, leaving Nordstrom’s earnings below analysts’ expectations. The retail firm said they have been pulling some orders forward to prepare for the holiday season and mitigate the supply-chain bottlenecks.
Moreover, Nordstrom is now adding back higher-end items after it shifted pricing too far to less-expensive goods.
In contrast to Gap and Nordstrom’s struggles, rivals like Kohl’s (NYSE:KSS) and Macy’s (NYSE:M) have been more successful in passing the higher costs to customers while managing inventory in the face of supply challenges.
Both companies boosted their outlook for the remainder of the year after reporting better-than-expected earnings last week.
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