Gap Earnings: Business Stabilizes as Stores Reopen
Gap (NYSE: GPS) was hit hard by the COVID-19 pandemic in the first quarter of fiscal 2020. Sales plunged 43% year over year, gross margin cratered to just 12.7% due to a $235 million inventory writedown, the company posted a net loss of $932 million, and free cash flow was negative to the tune of more than $1 billion.
The apparel retail giant started to pick up the pieces in the second quarter. While Gap's Q2 results were still weak by historical standards, they reflected a meaningful sequential improvement compared to the first quarter.
Gap's total sales declined 18% year over year in the second quarter. Online sales surged 95%, partially offsetting a 48% drop in store sales. Temporary store closures accounted for the majority of the decline in store sales last quarter. In fact, comparable sales -- a metric that excludes temporarily closed stores from the year-over-year comparison -- jumped 13%.
Source Fool.com
