The Gap Inc. (GPS) reported a nominal 1% increase in same-store sales for the five-week period ended July 3, 2010.
Results came in line with the 1% growth registered in June 2010.
The growth in same-store sales stemmed from International and Banana Republic North America reporting a 3% increase each, while Old Navy North America posting a 2% rise. However, Gap North America slipped 1%.
The company reported net sales of $1.38 billion in June 2011, compared with $1.31 billion in the year-ago period.
Gap’s year-to-date same store sales decreased 2.0%. Over the said period, the company’s total retail sales inched up 1% to $5.73 billion from $5.70 billion in the comparable period last year.
Guidance
Moving forward, the company is apprehensive about 2011 operating margin due to cost inflation. Consequently, the company has cut its fiscal 2011 earnings guidance to a range of $1.40 to $1.50 per share from the earlier expectation of $1.88 to $1.93 per share.
For fiscal 2011, the company now expects to open net 75 new stores, up from its earlier guidance of 65 stores.
Peer Comparables
Gap competes with The TJX Companies Inc. (TJX) among others. The latter reported June same-store sales growth of 5.0%
Based in San Francisco, California, The Gap Inc. is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products for men, women, children and babies. Its flagship brands include Gap, Banana Republic, Old Navy, Piperlime and Athleta.
We maintain our long-term Neutral recommendation on Gap. The quantitative Zacks #5 Rank (short-term Strong Sell rating) for the company indicates downward directional pressure on the stock over the near term.
GAP INC (GPS): Free Stock Analysis Report
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