The Gap (GPS) Shares off After Weak March Sales Report
Shares of The Gap Inc. (GPS) were trading down -1.91 or -6.90 percent to $25.77 per share in Friday’s premarket after the company reported lower than expected results for March sales after the market close on Thursday. The Gap stock closed at $27.68 per share, down -1.18 or -4.09 percent in Thursday’s regular trading session.
San Francisco, California based, The Gap Inc. is the world’s second largest retailer of clothing and accessories.
Gap Inc. reported net sales of $1.43 billion for the five-week period ended on April 2nd, 2016 after yesterday’s market close. This compares to net sales of $1.53 billion in the same five-week period one year ago. Comparable store sales for March were off six percent compared to an increase of two percent last year.
Comp sales by global brands in March had Old Navy Global comparable store sales show a negative six percent compared to a positive 14 percent last year; Gap Global, with a negative three percent versus a negative seven percent in 2015 and Banana Republic Global, which saw a negative -14 percent compared to a negative three percent last year.
The company cited an unexpected surplus of inventory entering April that the Gap expects will put pressure on its gross margin rate for the company’s first quarter of 2016. In the company’s press release, The Gap Chief Financial Officer, Sabrina Simmons noted that, “While March proved challenging, we remain focused on taking the necessary steps to improve results across the portfolio throughout the year”.
The Gap has been under considerable pressure since Art Peck took the helm as Chief Executive Officer in February of 2015. In an effort to turn the business around, the company has had considerable turnover in its senior management. At the end of last year, Stefan Larsson, the head of Old Navy stepped down to become the Chief Executive at Ralph Lauren (RL).
Following Larsson’s departure, Banana Republic’s creative director, Marissa Webb, who was hired to revive the brand resigned after delivering poor results. Nevertheless, Banana Republic brought back Wendi Goldman last year to help the company with product design.
Despite the company’s efforts to cut costs by closing stores and slashing its workforce, The Gap continues to lag competitors. Analysts say the company’s brand have lost relevance with young people who are increasingly shopping online. The Gap stock has been hit hard by the drop in business, showing a -35 percent decline for the last twelve month’s through yesterday’s closing price.
Other News About GPS
Gap Kids pulls controversial ad after critics call it 'racist'
Ad showed a 12-year old white girl leaning on an 8-year old black girl. The two girls are adopted sisters and members of the same performance troupe.
Gap Inc. Has Learned a Hard Lesson. Will Others Follow?
Fast fashion concept fails to pull Gap Inc. out of its rut.
Other Stocks in the News
Anavex's stock surges after Alzheimer's treatment granted orphan drug designation
Anavex shares were up more than seven percent in this morning’s premarket.
How Amazon will Kill Your Local Grocer
After changing the market for books, electronics and clothing, Amazon will now sell groceries.