May 10, 2016
Weak demand for Banana Republic, Old Navy weighs on Gap's results
May 10, 2016
Apparel retailer Gap Inc reported lower-than-expected quarterly sales at established stores, hurt by weak demand for its Banana Republic and Old Navy brands.
The San Francisco-based retailer's shares fell about 10 percent in extended trading on Monday.
Gap has struggled in the past few quarters after a series of fashion misses amid increasing competition from online and fast fashion retailers such as H&M, Forever 21 and Inditex's Zara.
"The company is identifying opportunities to streamline its operating model to be more efficient and flexible," Gap said in a statement.
The company estimated a profit of 31-32 cents per share for the first-quarter. Analysts' on average had expected 44 cents, according to Thomson Reuters I/B/E/S.
Comparable sales at Banana Republic stores fell 11 percent - the fifth straight quarterly decline - as the brand continued to struggle to attract shoppers.
Sales at Old Navy, a bright spot in recent years, fell 6 percent. Sales at the namesake Gap brand fell 3 percent.
Overall sales at established stores fell 5 percent in the quarter. Analysts on average had expected a decline of 2.6 percent, according to research firm Consensus Metrix.
Net sales fell 6 percent to $3.44 billion, missing the average analyst estimate of $3.54 billion.
The company is scheduled to report first-quarter earnings on after the bell on May 19.
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