Gap Reports Drop in March Sales, High Inventory Levels

Gap Inc. said Thursday that its sales fell in March and that high inventory levels will pressure profits in the first quarter.

Shares of Gap, down 35% over the past year, fell 9% to $25.20 in after-hours trading.

"While March proved challenging, we remain focused on taking the necessary steps to improve results," said Sabrina Simmons, Gap's chief financial officer.

Gap said its margins in the first quarter will be under pressure because the retailer entered April with more inventory than planned. Retailers, when faced with high amounts of inventory, frequently will discount prices, a move that can hurt profits.

For the five weeks ended April 2, Gap's total sales fell to $1.43 billion from $1.53 billion a year ago. On a comparable basis, a key metric to assess retailers' performance, Gap's same-store sales declined 6% in March; in the year-ago period, sales rose 2%.

At its different brands, the largest decline came from Banana Republic, which reported a 14% drop in same-store sales, compared with a 3% fall a year earlier. Old Navy, which has been a key sales driver, reported a 6% decrease in same-store sales, compared with a 14% increase a year ago.

Same-store sales at Gap's namesake stores fell 3%, narrower than a 7% drop in the year-ago period.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

April 07, 2016 17:45 ET (21:45 GMT)

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