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Gap's Key Metric Falls in September

Gap Campaign | Source: Gap
By
  • Associated Press

NEW YORK, United States — Gap Inc. said Thursday that a key revenue metric fell in September, missing Wall Street forecasts and stalling the clothing chain's sales momentum that it had enjoyed since early last year.

The San Francisco-based chain, which owns the Gap, Banana Republic, Old Navy, Piperlime, Athleta and Intermix brands, said that it posted a 3 percent drop in revenue at stores opened a year. That compares with a 6 percent increase in the year-ago period.

The results were well below the 1.6 percent gain that was expected by analysts, according to Thomson Reuters.

Gap's results for September reflect an overall cautious consumer spending trend as shown by other retailers like Costco Wholesale Corp. and L Brand, the Victoria's Secret parent, which reported sales figures Wednesday and Thursday. Consumers have been pulling back in recent months because of growing uncertainty about the economy. A government shutdown now in its second week has also added to those worries.

Gap was among the bright spots in an otherwise weak second-quarter earnings season for retailers. The company raised its earnings-per-share forecast for the year in August after its summer lineup helped boost results and advanced its turnaround push. Since early last year, Gap has been invigorating sales with more brightly-colored clothing, designer collaborations and livelier stores.

But the latest report from Gap shows it struggled last month.

"While September proved to be somewhat challenging, we remain steadfast in our commitment to deliver our full-year goals," Glenn Murphy, chairman and CEO of Gap Inc., said in a statement.

By division, revenue at stores open at least a year at Gap's global business was down 3 percent, while at Banana Republic, that figure was down 5 percent and at Old Navy, it fell 2 percent.

Gap, which reported after the regular markets closed, said that net sales for the five-week period ended Saturday was $1.46 billion, compared with net sales of $1.45 billion in the year-ago period.

Gap operates more than 3,100 company-operated stores and more than 300 franchise stores, along with its online shopping sites.

Shares of Gap Inc. dropped nearly 5 percent, or $1.84, to $37.84 in after-hours trading, after closing up 20 cents to $39.68 in regular trading.

Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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