Gap Projects Disappointing Results as Sales Slide at Banana Republic -- Update

By Lauren Pollock 

Gap Inc. forecast weaker-than-expected results for its recently completed quarter as the retailer's sales continued declining in October, particularly at Banana Republic.

Shares declined 5.4% after hours.

Gap, which has more than 3,700 stores under brands that include Old Navy, Banana Republic and its namesake division, has been trying to revamp, following a series of fashion mis-hits. Its shares have come under pressure as sales in recent months disappointed and the head of its top-performing Old Navy division departed to take over Ralph Lauren Corp.

For the quarter ended Nov. 1, Gap projected earnings, excluding one-time items, of 62 cents to 63 cents a share, short of the 66 cents a share projected by analysts polled by Thomson Reuters.

Sales slid 3% to $3.86 billion but were flat on a constant-currency basis and missed the $3.93 billion expected on Wall Street.

Gap said it also expects year-over-year inventory dollars per store at the end of the quarter to be slightly lower than it previously guided.

As for October, sales, excluding newly opened and closed locations, declined 3%, on top of a 3% fall last year. Analysts at Retail Metrics had guided for a 0.4% decline.

Banana Republic logged a 15% sales drop, while the Gap brand saw sales fall 4% and Old Navy notched a 2% increase.

Gap is due to report its quarterly results Nov. 19.

Write to Lauren Pollock at [e-mail]

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(END) Dow Jones Newswires

November 09, 2015 17:12 ET (22:12 GMT)

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