• Q3 profit slides 29.3% to $248m
  • Sales fell 3% to $3.86bn
  • Analysts mixed on turnaround timeframe 
Sales fell 3% during the quarter

Sales fell 3% during the quarter

Analysts remain mixed on how soon Gap's turnaround visibility will become clear, after the US retail giant Gap Inc saw its third-quarter net profit slide by more than a quarter, and lowered its full-year outlook. 

The San Francisco-based company said net income amounted to US$248m for the 13 weeks to 31 October, compared to $351m in the same period of the prior year. 

Sales were down 3% to $3.86bn from $3.97bn last year. Comparable sales fell 2%, weighed down by a 12% decline at Banana Republic and a 4% drop at Gap's namesake brand. Old Navy posted 4% growth. Online sales rose 2.3% to $635m from $621m a year ago. 

"With a challenging third quarter behind us, we are sharply focused on holiday execution across all channels," said CEO Art Peck. "We are driving forward on our key strategies designed to fuel future growth." 

The company now expects annual adjusted earnings per share to range from $2.38-2.42, down from $2.75-2.80 earlier. 

FBR & Co analyst Susan Anderson said: "Management remains optimistic about spring 2016 product for Gap and Banana Republic, but we believe turnaround visibility remains low and could be further out than anticipated, given time needed to regain the consumer and a highly competitive environment (potentially late 2016/early 2017)."

While Stifel analyst Richard Jaffe noted: "We are convinced that Gap can manage through a challenging Q4, with Old Navy carrying the underperforming Gap and Banana divisions. However, it is 1Q:16 when the likelihood of a turnaround at the Gap division will become clear."