Old Navy boosted December comparable sales for Gap

Old Navy boosted December comparable sales for Gap

US apparel giant Gap Inc has reversed an 18 consecutive month fall in comparable sales to record positive growth for the month of December, primarily driven by value division Old Navy.

For the five weeks ended 31 December, comparable sales were up 4%, versus a 5% decline last year. This is only the retailer's second positive monthly comp in the last 21 months.

The growth was well ahead of analyst expectations of a 1.7% decline and represented the largest monthly same store sales increase for Gap in more than two years dating back to November 2014.

Sales were primarily boosted by positive comparables from its Old Navy division, which was up 12% versus a negative 7% last year. The Gap brand was also in positive territory with comparable sales edging up 1% compared with a decline of 2% last year. Banana Republic was the only division to record a decline, of 7% from 9% in 2015.

"We're pleased with the improved momentum we saw over the holiday season, driven primarily by a positive customer response at Gap and Old Navy," says Sabrina Simmons, chief financial officer, Gap Inc. "Based on these results, we now expect full-year adjusted earnings per share to be modestly above the high end of our previous adjusted guidance range of $1.92."

Net sales in the five week period increased 3% to $2.07bn, compared to $2.01bn a year earlier.

FBR & Co analyst, Susan Anderson, noted: "Traffic was weighed down by Gap and Banana Republic, while Old Navy had much better traffic, though it was still somewhat negative. Week four was the strongest, though performance was good all month. We remain on the sidelines until we see consistent same-store sales improvement and sustained gross margin improvement or a more attractive entry point."