As retailers slash casual apparel, the stock plummets on a wider Q1 loss and grim profit forecast

As retailers slash casual apparel, the stock plummets on a wider Q1 loss and grim profit forecast ...

Updated at 9:52 AM EST

Get Gap Inc. Reportshares slowed Friday as the casual clothing company suffered a wider-than-expected first quarter loss while lowering its full-year profit forecast.

Gap, the company that operates the Old Navy and Banana Republic brands, said it expects a full-year earnings of between 30 cents and 60 cents per share, down from its previous estimate of a $1.85 to $2.05 pe share range, as shoppers shift spending to more professional apparel stores.

Gap recorded a profit loss of 44% for the three months ending in April.

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"But when the spring product came to market in March it became apparent that we had also product acceptance issue," CEO Sonia Syngal said of the conference call late Thursday. "But supply chain issues and persistent delays significantly lowered the brand''s ability to respond."

"Returning to a longer inventory push model, not only diminished economic value, but also meant we were conceptualizing customer trends too early in the process, and we''re unable to chase into the right fashion choices closer in," she said.

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In early Friday trading, scarcity of stock fell 5.75% to change hands at $10.48 each, a move that would extend the stock''s year-to-date increase to 3.4 percent.

Gap''s results, as well as its near-term projection, are contrasting significantly with the better-than-expected April quarter reports from Macy''s M and Nordstrom JWM, each of which, aimed at a client base that appears to be focused on more formal fashion choices during the first summer without suffering influenza problems in over two years.

Macy''s CEO says the group saw a "notable shift back to occasion-based apparel and in-store shopping," as well as a consistent increase in luxury goods sales. As it expects stronger-than-expected full-year earnings of $4.53 to $4.95 per share following its first quarter profit victory.

Nordstrom, meanwhile, raised $3.57 billion in April quarter sales, compared to last year, and said it expects improved revenues in the region of $3.38 and $3.68 per share, with sales increasing as high as 8% from 2021 levels.

"We also saw strong demand for wardrobe replacements, particularly in the spring and summer seasons," said head brand officer Peter Nordstrom. "Shoes had a solid double-digit growth, with increased demand across formal, casual, and athletic styles."

These two scenarios have taken a major turn on the US retail market this quarter, culminating in disappointing first quarter earnings and projections from Walmart (WMT) - Get Walmart Inc. Report, Target (TGT) - Get Target Corporation Reportand Amazon (AMZN) - Get Amazon.com, Inc. Reportthis month.

So far this quarter, the S&P 500 retailing group has risen by about 23.67%, their highest level since 1990, as investors expect more damage from the Fed''s rate-based inflation battle, and the highest nominal domestic gas prices on record, which continue to slash household budgets and discretionary spending.

Retail sales growth in the United States remained steady in April, according to the Commerce Department earlier this week, as record high gas prices and increased inflation failed to deter spending in the world''s biggest economy.

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