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Gap Shares Fall After Same-Store Sales Drop Unexpectedly in June

Gap store | Source: Flickr
By
  • Bloomberg

NEW YORK, United States — Gap Inc., the largest U.S. retailer focused on apparel, tumbled as much as 5.3 percent in late trading after posting a comparable-store sales drop for June.

Sales at stores open at least a year, including online orders, fell 2 percent, the San Francisco-based company said today in a statement. Retail Metrics Inc., a research firm that tracks the industry, had estimated a gain of 0.8 percent.

Sales at Gap's flagship chain and its Banana Republic stores both fell 7 percent last month. The lower-end Old Navy chain fared better, gaining 7 percent. That beat the 1.1 percent rise analysts had projected. Still, all three divisions performed worse than in the year-earlier period.

“Despite softer June results at Gap and Banana Republic, we remain focused on delivering in the upcoming fall season,” Chief Executive Officer Glenn Murphy said in the statement.

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Murphy has been working to buoy same-store sales after a 1 percent decline last quarter, the first quarterly drop since 2011. Gap is investing in technology to improve its online and in-store services, as well as boosting U.S. employees’ pay to at least $10 by 2015 -- a move the company says will help enhance customers’ experiences.

Gap shares fell as low as $38.78 in extended trading after the sales figures were released. The stock, down 7.1 percent over the past year, closed at $40.97 in New York.

The latest results show Gap is still struggling to find its footing after a slow start to the year, when a harsh winter hurt the entire U.S. retail industry. Old Navy has been a bright spot, thanks to its low prices and popular “ath-leisure” apparel, which combines athletic and leisure wear.

U.S. retailers have posted mixed same-store sales results for June, with five of the nine companies that report results missing estimates, according to Retail Metrics.

By Lindsey Rupp; Editors: Nick Turner, John Lear

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