Gap Inc. GPS is evidently losing its sheen given the repeated dismal sales performances. This time too the company has disappointed investors with soft sales for the four weeks ended Nov 28, 2015. The apparel retailing giant’s downfall in November is due to double-digit decline in comparable-store sales (comps) at its Banana Republic brand as well as dismal performances at its Gap Global and Old Navy brands, coupled with negative foreign currency impact.
Coming to the sales results, Gap’s comps for November decelerated 8%, against a 6% increase in the prior-year period. Net sales totaled $1.57 billion, down 9% year over year. On a currency neutral basis, sales for the month were down 8%.
Brand-wise, October comps for Gap Global were down 4% compared with an equivalent decline recorded in the year-ago period, while comps for Banana Republic Global dipped 19% as against a 2% increase last year. Comps for Old Navy Global declined 9%, whereas it was up 18% in the prior-year period.
The company has been reporting dismal sales trends for a while now, mainly hurt by the intensifying currency headwinds. Further, disappointing performance of its core Gap and Banana Republic Global brands are pressing concerns for the company. Persistence of these headwinds is likely to dent the top line and weigh on Gap’s overall performance.
Following another dismal quarterly performance, the company expects earnings per share for the third quarter of fiscal 2015 to be in the range of 62–63 cents. This excludes about 2.5 cents negative impact from foreign currency movements.
Moreover, the company now expects its inventory dollars per store at the end of third quarter to fall marginally short of its previously provided guidance.
Apart from Gap, certain other retailers also posted their comps data for November. While Rite Aid Corp. RAD and L Brands Inc. LB witnessed comps growth of 0.9% and 7%, respectively, comps at Zumiez Inc. ZUMZ declined 13.8%.
Gap, which carries a Zacks Rank #5 (Strong Sell), is scheduled to release its December comps on Jan 7, 2016.
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