Earnings and net sales of apparel retailer Gap, Inc. (NYSE: GPS) missed Wall Street’s estimates in the first quarter, hurt by dismal comparable sales performance. The unimpressive results triggered a selloff and the company’s stock lost 8% during Thursday’s extended trading session.
The San Francisco, California-based company posted a net profit of $227 million or $0.60 per share for the April-quarter, up from $164 million or $0.42 per share a year earlier. Earnings benefitted from favorable exchange rates. Adjusted earnings dropped to $0.24 per share and fell short of expectations.
At $3.71 billion, net sales were lower by 2% from the first quarter of 2018 and below the consensus estimate. Same-store sales were down 4% during the quarter, compared to a 1% gain in the year-ago period. Comparable sales of Old Navy Global and Gap Global dropped 1% and 10% respectively. The Banana Republic comparable sales were down 3%.
Comparable sales of Old Navy Global and Gap Global dropped 1% and 10% respectively, while Banana Republic slipped 3%
Art Peck, CEO of Gap, said, “We remain confident in our plan to separate into two independently traded public companies in 2020, and we are focused on setting up both companies for long term value creation and profitable growth.”
For fiscal 2019, Gap currently expects unadjusted earnings in the range of $2.04 per share to $2.14 per share. The forecast for adjusted earnings is $2.05-$2.15 per share. Full-year comparable store sales are expected to be down low single digits.
During the quarter, Gap repurchased 1.9 million shares for $50 million and paid a dividend of $0.2425 per share.
The management is currently in the process of splitting the company into two separate public entities. The focus of the restructuring is the separation the Old Navy brand, the most prominent among Gap’s business units that accounts for nearly half of its sales.
Among others, American Eagle Outfitters (AEO) will be reporting first-quarter results on June 5 early morning. Earlier this month, The Children’s Place (PLCE) reported an 80% fall in earnings to $0.36 per share for the first quarter when sales dropped about 6%.
Gap’s stock slipped to a three-year low this week and is trading slightly above $20. It lost around 26% in the past twelve months and 17% since the beginning of the year. The stock dropped sharply during the extended session Thursday, after closing regular trading lower.