Gap Inc. (GPS), one of the leading global specialty retailers, reported an increase of 8.0% in same store sales for the four-week period ended April 30, 2011. Results for the month compared favorably with same store sales decreasing 2.0% for the four-week period ended May 01, 2010.
Gap has reported an improvement in same store sales in every region, where it operates. The company's same store sales in the regions such as Old Navy North America and Banana Republic North America saw a double-digit growth of 14.0% and 11.0%, respectively compared with flat same store sales in the prior-year period. Gap's North America region reported a positive 2.0% growth in same store sales versus a negative 6.0% in the prior-year period. The company's same store sales from the international region witnessed an improvement from the prior-year period and reported a negative 1.0% growth versus negative 5.0% last year.
Net sales for the four-week period ended April 30, 2011 inched up 9.5% to $1.15 billion compared with net sales of $1.05 billion for the four-week period ended May 01, 2010 primarily due to improvement across all of company’s businesses in North America.
First-Quarter 2011 Sales
On April 30, 2011, Gap completed its first-quarter 2011 and reported a decline of 3.0% in same store sales compared with an increase of 5.0% in the prior-year quarter. During the quarter, Gap has reported a decline in same store sales in every region, where it operates. The company's same store sales in the regions such as North America, Banana Republic North America, Old Navy North America and International has recorded a negative growth of 3.0%, 1.0%, 2.0% and 6.0%, respectively.
Net sales for the first quarter of 2011 inched down 1.0% to $3.30 billion compared with net sales of $3.33 billion in the prior-year quarter.
First-Quarter 2011 Guidance
Gap is expecting earnings per share in the range of 38 cents and 39 cents for the first quarter of fiscal 2011 with merchandise margins considerably down.
Gap operates in a highly fragmented market and competes with well-established rivals such as American Eagle Outfitters Inc. (AEO) and The TJX Companies Inc. (TJX). With a reduction in disposable income and a cut in consumer discretionary spending resulting from the recent economic downturn, the company like all other retailers is under severe stress in order to maintain performance.
Gap's shares maintain a Zacks #3 Rank, which translates into a short-term 'Hold' rating. Our long-term recommendation on the stock remains 'Neutral'.
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