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Gap (GPS) Stock Declines 5% on Dismal July and Q2 Comps
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Shares of specialty-retailer The Gap Inc. (GPS - Free Report) fell 5.1% in the after-market trading session yesterday as the company came up with dismal sales results for July and second-quarter fiscal 2016. After a short-lived recovery in June, the sales and comparable store sales (comps) for this clothing retailer returned to doom as the sales and traffic trends that improved in June, worsened again in July.
Surprisingly, Gap’s top line is not getting the desirable assistance from the back-to-school selling season, a time when shoppers stock up on their clothing needs for the new school year.
Coming to numbers, Gap’s net sales for Jul 2016 dipped nearly 1.8% to $1.10 billion from $1.12 billion recorded in the same period last year. Also, the company’s comps for the month fell 4%, against a 3% dip noted in the year-ago period.
While comps at the company’s Banana Republic and namesake brands remained soft, Old Navy’s performance remained neutral.
Evidently, comps at Gap Global slipped 4%, after last year’s 7% decline. Further, performance at Banana Republic Global continued to deteriorate, as the brand recorded a 14% drop, versus a 10% fall last year. Old Navy on the other hand, spelled out decent results as comps remained flat, compared with a 3% increase witnessed last year.
Fiscal Second-Quarter Sales
Gap’s net sales fell 1.3% to $3.85 billion from $3.90 billion in the prior-year quarter, while it surpassed the Zacks Consensus Estimate of $3.75 billion. Also, the company’s comps for the quarter fell 2%, versus a 2% decline recorded in the year-ago period.
Comps at Gap Global fell 3%, following a 6% decline in the prior-year quarter, while Banana Republic Global reported comps decline of 9% compared with 4% dip last year. Old Navy posted flat comps for the quarter, compared with a 3% increase witnessed last year.
Q2 Guidance
Based on the sales performance, the company expects to report earnings per share (GAAP) of 30–31 cents for fiscal second-quarter 2016. Including the effects of its store closures and streamlining initiatives, the company expects adjusted earnings per share in the range of 58–59 cents, which is much ahead of the Zacks Consensus Estimate of 47 cents per share.
Background
Gap has been struggling with waning top-line results, owing to the ever-changing fashion trends, slow traffic and currency headwinds. However, management recently chalked out a fresh strategic plan to keep track of the accelerated pace of change in the apparel industry. The company intends to speed up its transformation plan by bringing meaningful changes to its product portfolio and operating capabilities worldwide.
Following the July sales results, analysts continue to believe that the Gap story is still not out of the woods. However, they are optimistic about the company’s efforts.
Stocks to Consider
Gap currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include The Children's Place Inc. (PLCE - Free Report) , with a Zacks Rank #1 (Strong Buy), and American Eagle Outfitters Inc. (AEO - Free Report) and Nordstrom Inc. (JWN - Free Report) , each with a Zacks Rank #2 (Buy).
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Gap (GPS) Stock Declines 5% on Dismal July and Q2 Comps
Shares of specialty-retailer The Gap Inc. (GPS - Free Report) fell 5.1% in the after-market trading session yesterday as the company came up with dismal sales results for July and second-quarter fiscal 2016. After a short-lived recovery in June, the sales and comparable store sales (comps) for this clothing retailer returned to doom as the sales and traffic trends that improved in June, worsened again in July.
Surprisingly, Gap’s top line is not getting the desirable assistance from the back-to-school selling season, a time when shoppers stock up on their clothing needs for the new school year.
GAP INC Price
GAP INC Price | GAP INC Quote
July Sales
Coming to numbers, Gap’s net sales for Jul 2016 dipped nearly 1.8% to $1.10 billion from $1.12 billion recorded in the same period last year. Also, the company’s comps for the month fell 4%, against a 3% dip noted in the year-ago period.
While comps at the company’s Banana Republic and namesake brands remained soft, Old Navy’s performance remained neutral.
Evidently, comps at Gap Global slipped 4%, after last year’s 7% decline. Further, performance at Banana Republic Global continued to deteriorate, as the brand recorded a 14% drop, versus a 10% fall last year. Old Navy on the other hand, spelled out decent results as comps remained flat, compared with a 3% increase witnessed last year.
Fiscal Second-Quarter Sales
Gap’s net sales fell 1.3% to $3.85 billion from $3.90 billion in the prior-year quarter, while it surpassed the Zacks Consensus Estimate of $3.75 billion. Also, the company’s comps for the quarter fell 2%, versus a 2% decline recorded in the year-ago period.
Comps at Gap Global fell 3%, following a 6% decline in the prior-year quarter, while Banana Republic Global reported comps decline of 9% compared with 4% dip last year. Old Navy posted flat comps for the quarter, compared with a 3% increase witnessed last year.
Q2 Guidance
Based on the sales performance, the company expects to report earnings per share (GAAP) of 30–31 cents for fiscal second-quarter 2016. Including the effects of its store closures and streamlining initiatives, the company expects adjusted earnings per share in the range of 58–59 cents, which is much ahead of the Zacks Consensus Estimate of 47 cents per share.
Background
Gap has been struggling with waning top-line results, owing to the ever-changing fashion trends, slow traffic and currency headwinds. However, management recently chalked out a fresh strategic plan to keep track of the accelerated pace of change in the apparel industry. The company intends to speed up its transformation plan by bringing meaningful changes to its product portfolio and operating capabilities worldwide.
Following the July sales results, analysts continue to believe that the Gap story is still not out of the woods. However, they are optimistic about the company’s efforts.
Stocks to Consider
Gap currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include The Children's Place Inc. (PLCE - Free Report) , with a Zacks Rank #1 (Strong Buy), and American Eagle Outfitters Inc. (AEO - Free Report) and Nordstrom Inc. (JWN - Free Report) , each with a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>