Gap Inc.’s April and first-quarter sales continued to struggle as weakness at its Gap brand, the earlier timing of Easter and unfavorable currency translation all took a toll on the retailer’s top line.
The San Francisco-based company, reporting four days after the rest of stores who continue to report comparable sales, said its April comps were down 12 percent during the month, with both Gap and Banana Republic shedding 15 percent and Old Navy pulling back 6 percent. All four figures fell below estimates provided by Thomson Reuters, which called for a 7.2 percent corporate decline, a 10.6 percent drop at Gap, a 5.8 percent dip at Banana Republic and a 4.9 percent pullback at Old Navy, which in recent years has been its fastest-growing brand by far.
With April closing out the fiscal first quarter, sales for the three months fell 3 percent to $3.66 billion from $3.77 billion in last year’s quarter. Gap said that unfavorable currency translation, mostly from the weakening of the yuan and Canadian dollar, cost Gap $90 million in sales revenue, putting the sales decline on a constant currency basis at 1 percent.
Quarterly comps were down 4 percent, with Gap down 10 percent, Banana Republic off 8 percent and Old Navy up 3 percent.
Without providing comparable figures for its other brands, Gap noted that comparable sales at Old Navy for the combined months of March and April rose 5 percent. The brand generated a 14 percent increase in March, while Gap fell 7 percent and Banana Republic declined 3 percent.
The earlier timing of Easter this year – April 5 versus April 20 a year ago – beefed up March comps at the expense of those last month.
“Old Navy delivered another quarter of positive comps, building on its track record of three consecutive years of growth,” said Sabrina Simmons, Gap’s chief financial officer. “We remain focused on driving improved performance across our other divisions.”
Old Navy had registered positive comps every month since March 2014, which preceded an 18 percent advance in April. Gap’s comps have been in negative territory every month for the last 12 and its turnaround a top priority for new chief executive officer Art Peck and brand president Jeff Kirwan, who succeeded Stephen Sunnucks in December.
With its three months of sales in the quarter now reported, Gap said it expected earnings of 55 to 56 cents per diluted share for the period, including a 2-cent benefit from the resolution of a tax dispute in the quarter. The consensus analyst estimate for the period was EPS of 55 cents.
Gap will report its full financial results for the quarter after the close of the markets on May 21.