Praveen Parmasivam

(Reuters] – Gap Inc (NYSE 🙂 forecasts 2022 earnings ahead of estimates on Thursday. It is betting that strong demand for Old Navy and Athleta brands will drive sales as Americans return to office and social events after the decline in Omicron cases.

Shares of the apparel retailer jumped 7.2% to $15.67 in extended trading, as it also posted a smaller-than-expected loss for the fourth quarter.

Many clothing chains are struggling to meet rising demand, due to port congestion and limited capacity.

Gap was forced to use higher-priced air freight for its imports. It said it expects that the inventory by the end of the quarter will rise to the mid-20s% range due to the fact that Gap ordered early in response to longer delays.

Customers are increasingly choosing dresses, new silhouettes or pants for backwork. They also prefer denim with new leg styles. On an earnings conference call, Sonia Syngal, chief executive of Syngal stated that it was a significant change over last year.

Gap projection fiscal 2022 adjusted earnings per shares between $1.85 to $2.05. This compares with Refinitiv IBES estimations of $1.86.

The company also hopes to profit from partnerships with Walmart (NYSE 🙂 for home products and Kanye West, who will launch new styles.

The strong outlook contrasts those from rivals Abercrombie & Fitch and American Eagle Outfitters (NYSE:), who have warned about freight expenses pressing their margins in 2022’s first half.

Gap will not be immune to industry supply issues in the short term.

Banana Republic’s parent company, Banana Republic, reported that comparable sales growth for the quarter ending Jan. 29 was below estimates. This indicated that there had been continued sales pressure into this quarter.

The net sales forecast was lower than the 3.8% range.