Gap same-store-sales fell again in April

Gap same-store-sales fell again in April

Gap Inc said it must transform at a faster pace as the US clothing giant revealed its thirteenth consecutive month of negative same store sales.

The San Francisco-based company, which operates more than 3,300 stores, saw comparable store sales fall 7% in April, hurt by a 7% decline at Banana Republic, a 10% drop at Old Navy and a 4% dip at its namesake brand. 

Net sales fell 7.4% to US$1.12bn for the five weeks to 30 April, compared to $1.21bn in the same period a year ago. 

"Our industry is evolving and we must transform at a faster pace, while focusing our energy on what matters most to our customers," said CEO Art Peck. "We are committed to better positioning the business to recapture market share in North America and to capitalising on strategic international regions where there is a strong runway for growth."

Stifel analyst, Richard Jaffe, said comparable sales came in well below its estimate and consensus; the underperformance a continuation of the weakness seen in March, when the pre-Easter surge failed to develop. 

"Rather, traffic and sales trends remained depressed throughout April, resulting in comp sales declining 7%, sequentially worse than the 6% decline in March. We believe this was due, in part, to poor customer response to a lacklustre spring merchandise assortment, particularly at Gap and Banana Republic."

In its first-quarter, net sales fell to $3.44bn from $3.66bn a year earlier. Comparable sales were down 5%, hurt by an 11% decline at Banana Republic, a 6% drop at Old Navy, and a 3% fall for its namesake brand.

Given Gap's weak April and first-quarter sales results, the company has guided first-quarter earnings significantly lower to a range of $0.31-$0.32 relative to the current $0.44 consensus. The company also said it is taking steps to "better position [itself] for improved business performance".

Gap is evaluating its Banana Republic and Old Navy fleets, primarily outside of North America, in order to sharpen its focus on geographies with the greatest potential. More details are expected to be shared during its first-quarter fiscal 2016 earnings announcement on 19 May.