Gap Inc. shares were lower Tuesday after the U.S. apparel retailer reported lower year-over-year sales, but said its fiscal fourth-quarter earnings would be higher than current estimates. Grim quarterly sales numbers suggest the problems facing the company’s Gap and Banana Republic outlets might be spreading to Old Navy, which had performed well through most of last year.
The San Francisco-based company has been struggling to keep pace with the so-called fast apparel retailers such as Uniqlo and H&M in recent years. The loss of Old Navy boss Stefan Larsson to head luxury fashion brand Ralph Lauren in September hasn’t helped. Larsson was widely credited with turning around Gap’s budget retail brand.
Old Navy sales dropped 8 percent in the three months ending in January, down from 11 percent growth in the same quarter of the previous year, the company said Monday. Banana Republic revenue dropped 14 percent compared with 1 percent year-over-year growth. Gap brand sales narrowed losses, to negative 3 percent from negative 6 percent, indicating some stabilization in the company’s namesake brand. Net sales in January were $813 million, down from $888 million in the same month last year, the company said.
On a brighter note, the company said its fourth-quarter earnings per share would be higher than analysts’ forecasts, to 56 or 57 cents. Gap’s share price was lately down 3 percent after a morning rally, more than the S&P’s 0.2 percent decline.
Gap Inc. (NYSE:GPS) will report fourth-quarter and full-year results on Feb. 25 after markets close in New York. The Gap is expected to report net income of $229.3 million, or 53 cents per share, according to an estimate of analysts polled by Thomson Reuters made before the company’s recent announcement. The company reported $319 million, or 75 cents per share, in the same quarter last year.
Revenue is expected to drop to $4.46 billion from $4.71 billion in the company’s fiscal fourth quarter.