US: Gap November sales miss forecasts
Gap's November figures showed another month of disappointment as same-store sales slumped 8%, missing analyst forecasts.
The same-store fall compared with a 4% decrease in November 2005. Net sales for the four-week period slipped 2% to US$1.40bn from $1.43bn a year ago.
By division, Gap North America sales dropped 7% compared to a 5% fall last year, Banana Republic sales slipped 1% compared to 5% last time, Old Navy North America sales saw a 10% plunge compared to 2%, and Gap International sales took a 8% tumble compared to static sales the year before.
"Overall, November was a challenging month as negative traffic trends persisted," said Sabrina Simmons, senior VP, corporate finance.
"Promotional and markdown activities at Gap and Old Navy drove total company merchandise margins below last year, and we expect pressure on merchandise margins to continue into December."
Year-to-date net sales were $12.41bn for the 43 weeks ended 25 November compared with net sales of $12.63bn in 2005. Comparable store sales decreased 7% compared with a 5% decrease in the prior year.
The company reiterated that it expects inventory per square foot at the end of the fourth quarter to be up in the low-single digits compared with the prior year.
Gap reported earlier this month that its third-quarter net income was down 10.9% with flat net sales and comparables down 7%.
"Gap continues to face fundamental structural challenges that stem in large part from its size and positioning," wrote Goldman Sachs analyst Margaret Mager in a recent research note.
"The company is being squeezed by smaller and more nimble specialty competitors on the one hand, and lower-cost big box retailers selling high-quality basic fashion apparel on the other. We view these challenges as secular and do not expect them to dissipate."
The company has insisted its widespread merchandising and store changes will soon start to reap dividends.
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Earlier this month Gap Inc reported the latest in a series of same-store sales declines, sparking speculation about the departure of Paul Pressler as Gap CEO and even a possible sale of the company. I...
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