Gap ends 14 months of falling same-store sales
Gap Inc has put an end to its 14-month run of negative same store sales, helped by a 5% increase in comparable sales at Old Navy.
The San Francisco-based company, which operates more than 3,300 stores, posted a 2% rise in net sales to US$1.57bn for the five-week period ended 2 July, compared to $1.54bn in the same period a year ago.
"We are pleased to see better performance across the portfolio this month, partly driven by an improvement in June traffic trends, particularly at Old Navy," said Sabrina Simmons, chief financial officer.
The company's comparable sales for June were up 2%, versus a 1% decrease last year and a 6% fall last month.
Despite the rise, results were hurt by a 4% fall in comparable sales at Banana Republic and a 1% drop at Gap.
Overall, sales for the month surpassed analysts' expectations, with Stifel analyst Richard E Jaffe saying the result was "well above our estimate and consensus".
Jaffe attributes the turnaround to Memorial Day holiday traffic and more favourable weather, and predicts Gap will achieve its objective of a low mid-single digit decline at the end of Q2.
However Stifel still foresees challenges ahead. "Despite an improvement in results during June, we anticipate continued challenges in the near term," Jaffe adds.
"The prolonged underperformance [at] Gap's business despite management's best efforts has undermined our confidence and limited our visibility for improvement."
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