Retailer Gap posts near-£1bn loss due to coronavirus
Clothing retailer Gap has reported a loss close to $1bn due to store closures because of the coronavirus pandemic.
The company was $932m (£740m) in the red for the three months to May, compared with a profit of $227m in the same period last year.
It comes as Gap wrote off the value of the goods it holds by more than a quarter of a billion dollars.
The firm’s shares were down by more than 8% in after-hours trade.
With net sales falling 43% in the period, Gap’s chief executive Sonia Syngal said they continued to reflect “material declines in May as a result of closures” but added that online demand was improving.
Retailers of non-essential goods, especially clothing, have been hit hard by restrictions aimed to help slow the spread of Covid-19.
Shops have been shut across much of the world as retailers were forced to limit their businesses to online operations.
San Francisco-based Gap, which operates almost 2,800 stores in North America, said that more than half of its company-operated stores in the US have now reopened.
Separately, Gap is is being sued by America’s largest shopping mall operator for refusing to pay rent for stores temporarily closed during the coronavirus pandemic.
Simon Property Group said in a lawsuit filed this week that the clothing retailer owes three months of rent, totalling $65.9m.
Gap has more than 390 stores at Indianapolis-based Simon’s malls, including its namesake brand, Old Navy and Banana Republic.
Simon Property Group temporarily closed all of its properties in March after major retailers at its malls, such as Gap, Macy’s and Nodstrom’s, shut their stores.
Large retailers, including Gap and sports shoe seller Foot Locker, have said they wouldn’t pay rent for stores that were forced to close due to the pandemic.
Gap did not directly mention the lawsuit during Thursday’s earnings conference call but chief financial officer Katrina O’Connell said “We’re just knee-deep in landlords today.”
“It’s very hard to say how long it will take, but I do know that one of our primary objectives is to use this opportunity to partner with our landlords to come up with a better profitability for the company.”