Gap Inc. perfectly exhibited the landscape of June comparable-store sales: blah.
The retailer, reporting after the market closed, said its same-store sales last month were basically flat from a year ago at $1.54 billion. Net sales in June rose 2 percent, which was higher than the Thomson Reuters estimate of a 0.5 percent decline.
Overall, most of the retailers still reporting comps managed to beat generally downbeat expectations, although hardly with record-setting numbers.
Gap Inc.’s figures showed the ongoing struggles at the core Gap brand, where comps were down 5 percent, lower than last year’s decline of 7 percent, but much higher than the estimate of a 3.8 percent drop. The company blamed some of its problems on delays on West Coast ports due to the dispute there, saying it was working through late-arriving units.
Banana Republic sales were much improved, coming in at a positive 1 percent, versus the estimated 1.1 percent decline. Banana Republic’s same-stores sales in June 2014 were down 7 percent, so this was a big move in the right direction. Old Navy was a big disappointment as it was estimated to be up 2.6 percent, but instead was only up 1 percent. Last year Old Navy was up 7 percent during the same period.
“As previously announced, we’re taking significant actions to help improve Gap brand’s performance,” said Sabrina Simmons, chief financial officer of Gap Inc. “We’re pleased customers continue to respond favorably to Old Navy’s on-trend collections with the brand delivering yet another month of positive comps.”
Sequentially, Gap Global did better than in May, when its sales were down 6 percent. Banana Republic also improved from May to June with sales down 5 percent in May, while Old Navy was hurt the most, with its May sales up 6 percent.
Gap stock dropped 1.5 percent in after-hours trading to $37.78 and is down 6.9 percent for the past year. The company recently revealed that it was closing 175 of its 675 stores in North America. The apparel chain is moving quickly with those plans as 140 stores are expected to close in the current fiscal year. Gap is also slashing 250 corporate jobs in San Francisco and New York.
Among other retailers, L Brands Inc. registered an overall comp increase of 3 percent, below the 3.4 percent expected by analysts polled by Thomson Reuters, while Victoria’s Secret posted a 1 percent gain, well below the 3.6 percent expected, and Bath & Body Works managed a 6 percent increase, versus the 4.2 percent increase expected.
The company expects a similar overall result this month, according to Amie Preston, chief investor relations officer, when it foresees a low-single digit increase. She said the company’s merchandise rate improved for the month while inventories per-square-foot finished the month 6 percent below their year-ago reading.
One of the strongest projected advances for June was expected to come from Stein Mart Inc., the Jacksonville, Fla.-based off-price/department store hybrid. The company surpassed the analysts’ consensus estimate of a 4 percent gain with a 5.8 percent improvement.
The company said business was “consistently strong” in all regions “except the Northeast and Midwest, which were more challenged.”
Both teen retailers in the sample did better than expected last month, with The Buckle Inc. registering a 0.5 percent increase versus the 0.7 percent decline expected, on average, by analysts, and Zumiez Inc. declining 3.3 percent, slightly less than the 3.6 percent decline anticipated.
Cato Corp. finished the month with a flat comp, versus the 1 percent decline analysts expected.
Costco Wholesale Corp.’s U.S. stores, excluding the impact of fluctuations in gas prices, posted a 6 percent gain for the month, one point better than the outcome expected.
Cowen & Co. analyst Oliver Chen noted that sales were particularly strong in softlines, which enjoyed mid- to high-single-digit increases based on strong sales of jewelry, women’s apparel, housewares and related categories.