Shares of The Gap Inc. (GPS) tumbled nearly 2.7% in the after-hours trading session yesterday following the company’s yet another month of negative sales results. The company posted a 6% decline in comparable store sales (comps) for March against a decline of 1% in March, 2013. The company’s February comps also haddeclined 7% compared with an increase of 3% in Feb 2013.
Net sales for the five-week period ended April 5, 2014, came in at $1.51 billion. None of the company’s brands performed well as comps remained negative across the board.
Comps at Gap Global were down 7% compared with flat comps in the prior-year period. Old Navy Global's comps declined 7% versus a 2% decrease in March 2013, while comps at Banana Republic Global fell 4%, against a 1% increase in the year-ago period.
However, management had earlier factored in weak sales due to the shift of Easter in April compared with March last year.
Though Gap disappointed on the sales front, the company reaffirmed its fiscal 2014 earnings guidance. Gap remains confident of achieving earnings per share of $2.90–$2.95 for fiscal 2014. The Zacks Consensus estimate is pegged at $2.96 per share.
However, the company has projected gross margins for the first quarter of fiscal 2014 will fall at a higher rate than the fourth quarter of fiscal 2013. Also, operating expenses for the first quarter are expected to remain flat year over year.
March has been challenging for the retailers. Apart from Gap, sports-related teen apparel, Zumiez Inc. (ZUMZ), also reported a 2.9% decline in comps for the five weeks ended Apr 5, 2014, compared with a comps increase of 2.1% for the five weeks ended Apr 6, 2013. Further, The Buckle, Inc. (BKE) and L Brands, Inc. (LB) reported a year-over-year decline of 1.8% and 1%, respectively, in comps for the five-week period ended April 5, 2014.
Gap currently carries a Zacks Rank #3 (Hold) and is scheduled to release its sales results for April 2014 on May 8, 2014.
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