Analysts expect continued pressure at Gap

Analysts expect continued pressure at Gap

Analysts expect continued pressure at Gap Inc's namesake brand, after the US retail giant reported its fifth consecutive month of comparable store sales declines.

The San Francisco-based retailer said comparable store sales fell 2% during the four weeks to 29 August, weighed down by an 8% fall at Gap and an 11% decline at Banana Republic. Old Navy, however, recorded growth of 6%.

Net sales declined 3% to $1.20bn from $1.23bn a year ago.

The group said this year's later Labor Day holiday offset the benefit from the shift of tax-free holidays in a number of states from July last year to August this year.

“We’re pleased that Old Navy delivered another strong month of positive comps driven by a healthy back-to-school business, as we remain focused on improving product performance across our portfolio,” said CFO Sabrina Simmons.

FBR & Co analyst Susan Anderson said comparable store sales were below expectations. Of Gap's namesake brand's performance, she said: “We see potential for slight improvement in September with Labor Day, but we expect continued pressure.”

But, she noted: “We think that risk of Old Navy performance declines outweighs the potential for a Gap turnaround near term, particularly with tougher Old Navy compares and markdown risk with increased inventories."