San Francisco–Shares of Gap Inc. were down in trading earlier today following the retailer’s disappointing March comp sales results that were released late Thursday.
Mirroring similarly down results from Buckle Inc. and Zumiez, Gap Inc. said its total March comparable store sales fell 6% compared with a 1% decrease a year ago. Analysts’ average estimate expected a 4.7% decline.
Merchandise Lacks ‘Pop’?
Much like the other companies reporting monthly sales on Thursday, Gap Inc. blamed the poor showing on the fact the Easter holiday is in April this year instead of March last year.
By retail division, Gap global posted a 7% drop in comp sales vs. flat last year. At Banana Republic global, comps were down 4% vs. a 1% increase last year, and at Old Navy, comps were down 7% vs. a 2% decline a year ago.
“While March performance has been challenging, we remain confident in the opportunities ahead,” said Glenn Murphy, chairman/ceo. “We are pleased to reaffirm our full-year EPS guidance range.”
As a result of the downward comps, Gap Inc. said gross margins for its first quarter would be below last year and operating expenses would be flat to last year.
“Gap’s spring assortment has not been well received by shoppers,” said Sterne Agee analyst Ike Boruchow. “From what we can tell, the product is lacking the ‘pop’ that carried it the past 24 months, with an overemphasis on neutral colors and no call to action on the bottoms business. Given order flows, this will likely persist through summer with an inflection potentially waiting for fall.”
Nevertheless, Gap Inc. reaffirmed its previous estimate for full year earnings: $2.90 to $2.95 a share. Analysts’ average estimate is for $2.96 a share.