Gap Shares Falter on 2% Decline in June Comps
June comparable-store sales (comps) for the apparel retailing giant Gap Inc. (GPS) fell 2% compared with the 7% growth registered for the 5 weeks ended Jul 6, 2013, owing to a decline in comps at its namesake and Banana Republic stores, offset by an improvement in Old Navy comps.
Unexpected decline in the company’s June comps surprised the investor community as comps results for most retailers fared well in June. Consequently, Gap shares suffered a 1.29% decline during yesterday’s afterhours trading session.
Some retailers with better-than-expected comps growth in June include Zumiez Inc. (ZUMZ), Rite Aid Corp. (RAD) and Costco Wholesale Corp. (COST) – which reported comps increase of 3.1%, 3.9% and 6.0%, respectively. The improved June results were mostly attributed to a rise in traffic probably due to the positive economic factors like an improved job scenario and consumer credit as well as heavy promotions and favorable weather.
Coming back to Gap’s sales results, net sales totaled $1.54 billion for the 5 weeks ended Jul 5, 2014, up 1% compared with the prior-year period sales of $1.53 billion.
Global brand-wise, performance at the company’s namesake brand and Banana Republic were disappointing while the Old Navy brand delivered stellar results. Old Navy Global's comps rose 7% versus a 13% increase in Jun 2013, while both Gap Global and Banana Republic Global posted a 7% decline, as against 5% and 1% comps growth, respectively, in the year-ago period.
Last month, the company reported comps increase of 1% for the 4 weeks ended May 31, 2014 compared with 7% growth registered for the 4 weeks ended Jun 1, 2013, driven by strong results at its Banana Republic and Old Navy stores. Moreover, net sales in May totaled $1.27 billion, up 4% compared with the prior-year period sales of $1.22 billion.
This Zacks Rank #2 (Buy) company is scheduled to release its sales results for July on Aug 7, 2014.
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