Gap Inc. (NYSE:GPS) comparable sales in December surged against the odds

Apparel Retail giant Gap Inc. (NYSE:GPS) posted a surprise surge in December comparable sales, and said it expected 2016 profit to beat the forecast, in sharp comparison to weak holiday sales from department store operators and some apparel retailers.

Company’s stock, which was boosted from robust demand for its Gap Inc. (NYSE:GPS) and Old Navy brands, were up 8% at US$25.14 in after-market trading on Thursday.

In the recent times the company has been in the process of overhauling the Gap and banana republic brands, looking to repeat the success of the low-end Old Navy attire.

Meanwhile comparable sales of its signature Gap brand surged I% in December, in contrast with a 2% drop year over year.

Sales of old Navy brand surged 12%, in contrast with a 7% drop year over year.

The company’s comparable sales increased 4% in December in contrast with the analyst’s prediction of a 0.7% drop.

In the recent periods Gap and other traditional apparel chains have been struggling with the surging status of online retailers and fast-fashion chains such as H&M, Forever 21 and Inditex’s Zara, which are popular for offering up-to-the-minute clothes at much better prices.

Gap (GPS), which is also shutting stores and reducing overhead costs, said it now expected full-year 2016 adjusted profit to be modestly above the higher end of the prediction range of US$1.87-US$1.92 per share.

Furthermore department-store chains Macy’s Inc and Kohl’s Corp both dropped their 2016 profit projections on Wednesday, after their holiday season sales dropped more than estimated.

Moreover American Eagle Outfitters Inc, which said fourth-quarter comparable sales to date were flat, said on Thursday “the holiday sales season was choppy and highly promotional.”

Gap Inc. (NYSE:GPS) and Abercrombie & Fitch (NYSE:ANF) struggling to end an ongoing slide in turnover

Stock of two U.S. largest outfit retailers plunged on Friday after undesirable third quarter sales and a laidback estimate for the decisive holiday shopping season.

Gap Inc. (NYSE:GPS) announced earnings of seventh successive quarter of dropping revenue and mentioned that less than expected people were visiting stores.

Meanwhile another giant Abercrombie & Fitch Co. (NYSE:ANF) stock dropped 13.9% on deprived sales and a frail outlook. In the recent months both companies have been trying to rejuvenate their brands, with inadequate success.

In the meantime Neil Saunders, who is the chief executive of Conlumino, the retail research company, highlighted the fault for Abercrombie & Fitch’s poor statistics on poor communication with customers also about the alterations it has made to its fashion lines.

The company was at one time famous for its picture-perfect models and sales assistants, as well as Abercrombie & Fitch marked garments, the retailer has shifted “towards a more inclusive and gentler approach with an emphasis on stylish, quality clothing”, said Mr Saunders.

Nevertheless, a “confusing” marketing movement, poor foot traffic at both its leading and mall-situated shops and warmer weather resulted a 6% fall in third quarter sales to $821.7m and an 80% slump in profit to $7.9m.

Furthermore Abercrombie & Fitch (NYSE:ANF) announced that it foresees trade to remain challenging for the rest of the year, which includes Black Friday, the post-Thanksgiving Day shopping jamboree, as well as Christmas and the New Year.

Gap also mentioned the similar causes in the current quarter covering the holiday period and also announced to shutter almost 65 stores this year in contrast to a previous prediction of 50 closures. The company said in October that is set to close down Banana Republic outlets in the UK to focus on its North American business.

Gap (NYSE:GPS) sales dropped by 2% and profit dipped to $204m for the third successive period. While its Old Navy brand flourished with revenue up 3%, sales at Gap Global and Banana Republic both dropped by 8%.

Gap Inc. (NYSE:GPS) profits slipped again as it struggles to entice customer

Gap Inc. (NYSE:GPS) announced its results of fiscal third quarter reporting an 18% plunge in quarterly profit as the famous attire-maker had its seventh straight period of waning sales and absorbed costs tied to store closures.

During the period company’s sales slipped 2% to $3.80 billion, with the biggest drops at stores open for at least a year coming at the Gap brand and Banana Republic chains. Currents results were also hurt by a fire in August at one of the company’s largest distribution centers.

Over all the major retailers have been quite upbeat for the holiday season, though there have been areas of softness, particularly at department stores and apparel chains. For most firms, tighter inventories have translated into lesser and fewer markdowns.

The apparel giant’s spokeswomen said in a statement that it is still finding it hard to entice shoppers into its stores. “We understand the fact that traffic is likely to continue to be challenging as we look forward,” said finance Chief Sabrina Simmons.

Furthermore, according to company’s statement, Ms. Simmons is about to leave the company and Teri List-Stoll, former chief financial officer of Dick’s Sporting Goods Inc., will undertake her responsibilities from Jan. 17.

In the recent times, Gap has been finding it hard with an extended sales slump as booming rivals like H&M and Zara are stealing the show. During the last quarter, the company had to shutter its Old Navy stores in Japan and several Banana Republic stores.

The company with almost 3730 store around the world said in a statement that it now forecasts to shutter a net 65 company-run stores this fiscal year, up from the net 50 it expected at the end of the previous quarter. It recently decided to close its Banana Republic stores in the U.K.

In the 3 month period ended Oct. 29, Gap (NYSE:GPS) profit was $204 million, down from $248 million year over year.

Analysts Upgrade of the Day: Gap Inc (NYSE:GPS)

Gap Inc (NYSE:GPS) received a stock rating upgrade from Mizuho on Aug-09-16. In a note to investors, the firm issued a Neutral rating. The analysts previously had an Underperform rating on the stock.

The 52-week price range is $16.82-$34.30 and the company has a market capitalization of $9.18 billion. Analysts covering the shares maintain a consensus Hold rating, according to Zacks Investment Research. 6 analyst has rated the stock with a sell rating, 12 has assigned a hold rating, 0 says it’s a buy, and 3 have assigned a strong buy rating to the company.

Gap Inc (GPS) on August 9, 2016 reported that net sales for the four-week period ended July 30, 2016 were $1.10 billion compared with net sales of $1.12 billion for the four-week period ended August 1, 2015. For the second quarter of fiscal year 2016, Gap Inc.’s net sales were $3.85 billion compared with $3.90 billion for the second quarter last year.

“While performance varied during the quarter, we made progress on our streamlining initiatives and continued to see signs of improvement in our larger brands,” said Sabrina Simmons, chief financial officer, Gap Inc.

Second Quarter Guidance

On a reported basis, the company expects its diluted earnings per share for the second quarter of fiscal year 2016 to be in the range of $0.30 to $0.31.

Excluding the negative impact associated with its previously announced store closure and streamlining measures, which is approximately $0.28 and includes the impact from a higher tax rate, the company expects its adjusted diluted second quarter fiscal year 2016 earnings per share to be in the range of $0.58 to $0.59. Please see the reconciliation of adjusted diluted earnings per share, a non-GAAP financial measure, from the GAAP financial measure in the table at the end of this press release.

Additional insight into Gap Inc.’s sales performance is available by calling 1-800-GAP-NEWS (1-800-427-6397). International callers may call 706-902-4949. The recording will be available at approximately 1:15 p.m. Pacific Time on August 8, 2016 and available for replay until 1:15 p.m. Pacific Time on August 12, 2016.

Second Quarter Earnings

Gap Inc. will release its second quarter earnings results via press release on August 18, 2016 at 1:15 p.m. Pacific Time. In addition, the company will host a summary of Gap Inc.’s second quarter results during a live conference call and webcast on August 18, 2016 from approximately 1:30 p.m. to 2:15 p.m. Pacific Time. The conference call can be accessed by calling 1-855-5000-GPS or 1-855-500-0477 (participant passcode: 7405599). International callers may dial 913-643-0954. The webcast can be accessed at www.gapinc.com.

Stock Upgrade of the Day: Gap Inc (NYSE:GPS)

Gap Inc (NYSE:GPS) received a stock rating upgrade from Wolfe Research on Jul-26-16. In a note to investors, the firm issued an Outperform rating. The analysts previously had a Peer Perform rating on the stock.

The 52-week price range is $16.82-$35.43 and the company has a market capitalization of $10.21 billion. Analysts covering the shares maintain a consensus Hold rating, according to Zacks Investment Research. 6 analyst has rated the stock with a sell rating, 3 has assigned a hold rating, 0 says it’s a buy, and 3 have assigned a strong buy rating to the company.

Gap Inc (GPS) on July 8, 2016 reported that net sales for the five-week period ended July 2, 2016 increased 2 percent to $1.57 billion compared with net sales of $1.54 billion for the five-week period ended July 4, 2015.

“We are pleased to see better performance across the portfolio this month, partly driven by an improvement in June traffic trends, particularly at Old Navy,” said Sabrina Simmons, chief financial officer, Gap Inc.

June Comparable Sales Results

Gap Inc.’s comparable sales for June 2016 were up 2 percent versus a 1 percent decrease last year. Comparable sales by global brand for June 2016 were as follows:

  • Gap Global: negative 1 percent versus negative 5 percent last year
  • Banana Republic Global: negative 4 percent versus positive 1 percent last year
  • Old Navy Global: positive 5 percent versus positive 1 percent last year

Additional insight into Gap Inc.’s sales performance is available by calling 1-800-GAP-NEWS (1-800-427-6397). International callers may call 706-902-4949. The recording will be available at approximately 1:15 p.m. Pacific Time on July 7, 2016 and available for replay until 1:15 p.m. Pacific Time on July 15, 2016.

July Sales

The company will report July sales at 1:15 p.m. Pacific Time on Monday, August 8, 2016.

The Gap, Inc. operates as an apparel retail company worldwide. It offers apparel, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Athleta, and Intermix brands. The company provides apparel, eyewear, jewelry, shoes, handbags, and fragrances; and performance and lifestyle apparel for use in yoga, strength training, and running, as well as seasonal sports, including skiing and tennis. The Gap, Inc. offers its products through company-operated stores, franchise stores, Websites, e-commerce and social media sites, and catalogs. The company has franchise agreements with unaffiliated franchisees to operate Gap, Banana Republic, and Old Navy stores in Asia, Australia, Europe, Latin America, the Middle East, and Africa. As of January 30, 2016, it operated, 3,721 company-operated and franchise store locations. The company was founded in 1969 and is headquartered in San Francisco, California.

Yesterday’s Downgrade: Gap Inc (NYSE:GPS)

Gap Inc (NYSE:GPS) received a stock rating downgrade from Standpoint Research on Jul-25-16. In a note to investors, the firm issued a Hold rating. The analysts previously had a Buy rating on the stock.

The 52-week price range is $16.82-$35.79 and the company has a market capitalization of $9.96 billion. Analysts covering the shares maintain a consensus Hold rating, according to Zacks Investment Research. 6 analyst has rated the stock with a sell rating, 13 has assigned a hold rating, 0 says it’s a buy, and 3 have assigned a strong buy rating to the company.

Gap Inc (GPS) on May 20, 2016 reported first quarter fiscal year 2016 results and provided an update on the strategies outlined on May 9, 2016 to better position the company for improved business performance and to build for the future.

Gap Inc.’s first quarter fiscal year 2016 diluted earnings per share were $0.32. Total company net sales were $3.44 billion for the first quarter of fiscal year 2016 and comparable sales were down 5 percent.

“As the pace of change across the apparel industry increases, now is the time to accelerate our transformation by scaling our product and operating capabilities across our global portfolio,” said Art Peck, chief executive officer, Gap Inc. “By taking every opportunity to exploit our strategic advantages, our brands will be able to more fully harness the power of the enterprise to better serve their customers across channels and geographies.”

As part of Gap Inc.’s continued commitment to better position the company for long-term growth, the company has announced the following measures to better align talent and financial resources against its most important priorities:

  • Focus on geographies with the greatest potential. The company remains committed to growing its brands in regions where it has a structural advantage and the greatest opportunity to gain market share. As part of this effort, Old Navy will strategically shift its focus to markets most favorable to the brand’s growth, resulting in the closure of its fleet of 53 stores in Japan in fiscal 2016. Old Navy’s near-term growth ambitions will be anchored in North America, including its most recent debut of company-operated stores in Mexico, as well as China and its global franchise operations. Japan remains an important market for Gap Inc.’s portfolio, with a continued strong presence of more than 200 Gap and Banana Republic stores. Additionally, the company expects to close select dilutive Banana Republic stores, primarily internationally, in fiscal year 2016. In total, the company expects to close about 75 stores related to these measures.
  • Streamline its operating model. The company will take steps to create a more efficient global brand structure, enabling its portfolio of brands to more fully leverage its scale advantage and move even faster in anticipating and responding to the ever-changing environment and needs of customers.

The company estimates that together these measures will result in annualized pre-tax savings of about $275 million and operating margin improvement of nearly 2 percentage points. The company estimates an annualized sales loss of about $250 million associated with the store closures and expects to recognize restructuring costs in fiscal 2016 of about $300 million pre-tax, about $100 million of which is non-cash, from the store closures and streamlining measures.