Gap Inc. managed to show an increase in its first-quarter net profit but had disappointing sales performances across all divisions and failed to meet Wall Street expectations.

Net income for the quarter reached $227 million, versus $164 million in the year-ago period, but comparable sales were down 4 percent in the last quarter compared with a 1 percent increase last year.

By division, Old Nav’s global comparable sales were negative 1 percent; Gap global was negative 10 percent, and Banana Republic global was negative 3 percent.

Adjusted earnings per share were 24 cents, while 32 cents had been expected.

Art Peck ceo gap old navy banana repulbic

Art Peck disappointed with Gap Inc.’s first-quarter performance.  Mark Lennihan/AP/REX/Shutterstock

Net sales were $3.7 billion, a decrease of 2 percent compared with last year. The translation of foreign currencies into U.S. dollars negatively impacted the company’s net sales for the first quarter by about $34 million.

The company ended the first quarter of fiscal year 2019 with $2.24 billion in merchandise inventory, up about 10 percent. The company said the increase in inventory was impacted by the acquisition of Janie and Jack, increases in in-transit times, and net store growth year-over-year.

“This quarter was extremely challenging, and we are not at all satisfied with our results. We are committed to improving our execution and performance this year,” said Art Peck, president and chief executive officer of Gap Inc.

“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.”

As announced back in February, the $16.6 billion Gap Inc. plans to split into two publicly traded companies: Old Navy, and the other consisting of Gap, Athleta, Banana Republic, Intermix and Hill City.

Peck will run the new company, set to be created by next year, while Sonia Syngal, president and ceo of Old Navy, will remain in place.

The company is further restructuring by shuttering around 230 Gap stores over the next two years, resulting in an estimated annualized sales loss of approximately $625 million, as previously reported.

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