FINANCE

Gap sounds concern about its namesake brand

BY Marianne Wilson

Gap Inc.’s namesake brand continues to cast a shadow over the company at large.

The retailer reported flat same-store sales for its third quarter, compared with a 3% increase in the year-ago period. Analysts had expected a 1% increase. Same-store sales fell 7% at Gap, a much larger drop than expected. Comp sales rose 4% at Old Navy and 2% at Banana Republic.

“We are pleased to report continued solid performance from Old Navy, Banana Republic and Athleta leading into the important holiday season,” said Art Peck, president and CEO, Gap Inc. “We are clearly not satisfied with the performance of Gap brand. We know this iconic brand is important to customers, and we are committed to taking the bold and necessary steps to ensure that it delivers value to shareholders.”

Gap earned $266 million, or 69 cents a share, in the quarter, up from $229 million, or 58 cents a share, in the year-ago period. Analysts had expected earnings per share of 67 cents a share.

Net sales increased 7% to $4.1 billion, just ahead of analysts’ estimates. Excluding the presentation changes from the adoption of the new revenue recognition standard, net sales increased 2% compared with last year.

Gap narrowed its full-year earnings per share guidance range to $2.55 to $2.60, compared with previous guidance of $2.55 to $2.70.

The company ended the quarter with 3,688 store locations in 43 countries, of which 3,218 were company-operated.

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