Gap Store Sales Gutted, Drags on 1Q

Gap Inc. (NYSE:GPS) welcomed fewer shoppers in April across all three of its major brands. Store-sales sank 15% at Gap and Banana Republic compared to the year-ago period, while sales at Old Navy dipped 6%. Shares fell more than 2% in extended trading.

The company blamed the early Easter holiday for the weak monthly sales. However, the entire first-quarter wasn’t much better, with the exception of Old Navy, which saw a sales bump of 3%. Sales at Gap fell 10% and Banana Republic 8%, steeper declines than the year-ago quarter.

In a statement, Gap Inc. Chief Financial Officer Sabrina Simmons highlighted the positive trends at discount chain Old Navy while also acknowledging the need to increase sales.“We remain focused on driving improved performance across our other divisions,” said Simmons.

As a result, Gap’s 1Q net sales fell 3% to $3.66 billion, missing analysts' estimates of $3.7 billion as tracked by Thomson.  The weaker Japanese yen and Canadian dollar contributed to the sales short-fall, according to the company. Diluted earnings per share will range from $0.55 to $0.56, in line with estimates. Gap will officially report results on May 21st.

Gap shares have declined 6% this year, trailing the Consumer Discretionary Select Sector SPDR ETF (NYSE:XLY), which has advanced by the same amount.