(Boursier.com) — gap jumped into pre-session on Wall Street. The fashion chain unveiled better-than-expected first-quarter results, thanks to lower costs and expenses as well as lower discounts. “We continue to take the necessary steps to achieve critical changes at Gap, ultimately getting us back on track to achieve consistent long-term results,” said interim chief executive Bob Martin. In April, the company announced it would eliminate about 1,800 jobs as part of a broader restructuring plan that is expected to save about $300 million a year.
Over the three months to the end of April, the firm recorded an adjusted EPS of 1 cent against a loss of 16 cents expected by the market, for net sales down 6% to $3.28 billion. The gross margin was 37.1% against 34.6% consensus.
Inventories over the period fell 27%, the second straight decline after four quarters of double-digit increases. This is another positive sign for investors, given Gap’s past struggles with commodity surpluses. In the current quarter, Gap anticipates a 5-9% decline in net sales, partly due to the sale of Gap China earlier this year. The unit generated $60 million in sales during the same period in 2022, which hurt the year-over-year comparison. For the full year, Gap expects net sales to decline 1-5% and margins to continue improving.
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