The Gap Inc. GPS lost 3.7% value on Friday after reporting comparable store sales (comps) results on Apr 9, post market close. The company turned around after posting negative comps in the previous two months but failed to cheer investors.
Gap reported a 2% rise in comps for the five weeks ended Apr 4, 2015, compared with a 6% decline reported last year. The improvement came largely on the back of the shift in Easter timing to March this year. However, the company expects the calendar shift to weigh on its April comps.
Net sales in March increased 1% year over year to $1.53 billion compared with $1.51 billion reported last year. Sales growth was driven by the favorable customer response to the company’s Old Navy brand during the spring shopping season.
Brand-wise, March comps at Banana Republic Global and Gap Global fell 3% and 7%, respectively, compared with respective declines of 4% and 7% recorded last year. However, Old Navy Global comps improved 14% as against a 7% decline posted in Mar 2014.
Earlier, the company had posted solid fourth-quarter fiscal 2014 results, wherein earnings of 75 cents a share came a penny ahead of the Zacks Consensus Estimate and jumped 10.3% year over year. Also, net sales increased 2.9% year over year to $4,708 million, marginally ahead of the Zacks Consensus Estimate of $4,707 million.
However, this Zacks Rank #3 (Hold) company provided a subdued guidance for fiscal 2015 owing to currency headwinds and delay in merchandise receipts at West Coast ports on account of labor dispute, which is expected to hurt earnings per share by 16 cents and 13 cents, respectively.
For fiscal 2015, the company expects earnings of $2.75–$2.80 per share and operating margin of nearly 11.7%.
The company is slated to release its sales data for the month of April on May 11.
Though Gap and some other retailers like L Brands LB managed to register comps growth in March, results for most retailers were impacted by the inclement weather conditions and disturbance at the West Coast port facility. Riddled with such challenges, retailers like Costco Wholesale Corporation COST and Buckle Inc. BKE posted comps decline of 2% and 0.5%, respectively.
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