Gap same-store sales fall for 14th month in a row in May
Gap comparable store sales fell 6% in May
Gap Inc said it is making progress and maintaining financial discipline, despite the US clothing giant revealing its fourteenth consecutive month of negative same store sales.
The San Francisco-based company, which operates more than 3,300 stores, saw comparable store sales fall 6% in May, hurt by an 11% decline at Banana Republic, a 7% drop at Old Navy and a 3% dip at its namesake brand.
Net sales fell 5% to US$1.18bn for the four weeks to 28 May, compared to $1.25bn in the same period a year ago.
"As we move into the second quarter, we are continuing to make progress against our recently announced measures while maintaining the financial discipline we are known for," said Sabrina Simmons, chief financial officer, Gap Inc.
Stifel analyst Richard Jaffe said the comparable sales decreased was slightly better than his estimate and consensus.
"Management indicated that May results were negatively impacted by a shift in the Memorial Day holiday, with Sunday and Monday falling into June this year. However, the company saw an acceleration of traffic and sales heading into Memorial Day, an acceleration that was not apparent heading into Easter last month. This was likely, in part, driven by more favourable weather."
In it's first-quarter update, Gap announced plans to close 75 Old Navy and Banana Republic stores outside North America in a bid to save US$275m a year.
The news came amid a 47% drop in first-quarter profits to $127m and a 5% decline in comparable-store sales. Total sales fell to $3.44bn from $3.66bn a year earlier. By brand, comparable sales were down 3% at Gap, tumbled 11% at Banana Republic, and slipped 6% at Old Navy.
Conlumino CEO Neil Saunders described it as a "disastrous" quarter for Gap, adding: "All of its main engines stalled and went into reverse. Even the usually reliable Old Navy brand struggled, with a sales shrink over the prior year. Most worryingly, while the latest April numbers are likely impacted by the earlier Easter, they nevertheless show that all brands failed to gain any momentum as the quarter progressed. Indeed, in the case of Old Navy the sales slip accelerated."
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