Gap Comparable Sales Fall at Three Main Brands

Gap Inc. said same-store sales at its three main brands declined in May, calling the month "challenging" but noting that performance improved leading into Memorial Day weekend.

Total sales for the four weeks ended May 28 fell 5% to $1.18 billion.

Gap shares rose 5% to $19.26 in after-hours trading.

Comparable sales fell 3% at Gap, 11% at Banana Republic and 7% at Old Navy, leading to an overall company decline of 6%.

Analysts polled by Thomson Reuters had projected a 7.2% total decline. Gap and Banana Republic had narrower losses than analysts expected, while Banana Republic's decline was larger than they projected.

The company on May 9 said it was suffering from a "tepid macro environment for apparel retail" and said the timing of Memorial Day would hurt May sales results and help June figures.

Gap is being squeezed by fast-fashion retailers such as Hennes & Mauritz AB and Zara owner Inditex SA, which push low-price items and shift their selections quickly.

Mall-focused chains have been hurt by a shift to online shopping and heavy discounting.

Late last month, Express Inc. slashed its guidance for the year and gave a bleak outlook for the current quarter, while Abercrombie & Fitch Co. said sales at stores open at least a year fell 4% in the April 30 quarter.

To combat the sales slump, Gap Chief Executive Art Peck has brought in new executives and promised to source goods more quickly.

Gap said May 20 that it would close all its Old Navy stores in Japan and some Banana Republic locations mostly outside of North America by the end of its business year.

On Thursday, the company said "we are continuing to make progress against our recently announced measures while maintaining the financial discipline we are known for."

Write to Josh Beckerman at [e-mail]

(END) Dow Jones Newswires

June 02, 2016 17:45 ET (21:45 GMT)

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