The Gap Inc. GPS posted another month of dismal results as comparable store sales (comps) and sales numbers declined for the four weeks ending May 28, 2016.
However, the market responded positively as the stock rose nearly 4.6% in afterhours trading, mainly on the back of management’s statement that sales and comps will improve in June given the shift in the Memorial Day holiday weekend, which was in May last year.
Additionally, the company indicated that it is seriously pursuing its recently announced strategies while maintaining its strong financial discipline.
May Sales
Coming to sales results, the company reported net sales of $1.18 billion in May, down 5% from $1.25 billion recorded in the year-ago period.
Comps for the four weeks ended May 28, 2016 were down 6%, compared with a 1% decline witnessed last year. The fall in May comps can be attributed to the shift of the Memorial Day holiday period from May to June this year. Also, soft sales at each of the company’s brands led to the downside. This marked the company’s 14th consecutive month of negative comps.
Comps at Gap Global slipped 3%, compared with last year's 6% decline. Old Navy Global witnessed a 7% slump in comps, reflecting a reversal from 6% growth recorded last year. Performance at Banana Republic Global continued to deteriorate, as the brand recorded an 11% plunge following a 5% fall last year.
Gap is scheduled to release its June sales results on Jul 7.
Stocks to Consider
Some better-ranked stocks in the same industry worth considering include The Children's Place, Inc. PLCE and Destination XL Group, Inc. DXLG, each with a Zacks Rank #2 (Buy). Another favorably placed stock in the broader retail space is Wal-Mart Stores Inc. WMT, carrying a Zacks Rank #2 (Buy).
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