Gap Hit by 6% March Sales Drop, Missing Expectations

By RetailFOXBusiness

Gap (NYSE:GPS) disclosed a weaker-than-expected 6% drop in March same-store sales on Thursday as Old Navy and the apparel maker’s namesake brand stumbled at the end of the first quarter.

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Despite the disappointing sales performance, Gap reaffirmed its call for full-year earnings of $2.90 per share, compared with the Street’s view of $2.95.

“While March performance has been challenging, we remain confident in the opportunities ahead,” Gap CEO Glenn Murphy said in a statement.

Gap said its March comparable sales declined 6%, trailing forecasts from analysts for a more modest slide of 4.1%. The year-earlier period saw a 1% dip in sales. Both Gap brand and Old Navy sales slumped 7% last month, while Banana Republic saw a 4% reduction in sales.

Gap reiterated that the later Easter holiday negatively impacted sales.

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Looking ahead, Gap said it expects gross margins in the first quarter to contract year-over-year by more than they did in the fourth quarter of last year. Management also said it expects 2014 operating expenses to be flat.

Shares of San Francisco-based Gap dropped 2.44% to $38.32 in after-hours trading on Thursday, building on a 1.75% during regular trading that outperformed the broader markets.

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