Global slump for Gap Inc sales in first quarter
Gap Inc sales have slumped globally and across the whole company with the Gap brand the worst performer, down 10 per cent.
“This quarter was extremely challenging, and we are not at all satisfied with our results,” said president and CEO Art Peck in a results release. “We are committed to improving our execution and performance this year.”
Against a first-quarter Gap Inc sales increase of 1 per cent last year, group sales fell 4 per cent in the three months to May 4. Worldwide comp sales for the Gap brand were down 10 per cent (compared with 4 per cent in the same period a year ago), for Banana Republic by 3 per cent (compared with 3 per cent growth last year) and for Old Navy – the star of the group in recent quarters – by 1 per cent (verses positive 3 per cent last year).
The poor results come as Gap Inc prepares to split its business into two separate entities, both listed: one owning the value-focused Old Navy brand, the other the more premium offer of Gap and Banana Republic.
Peck said Gap Inc remains confident in its plan to separate the two businesses next year, “and we are focused on setting up both companies for long term value creation and profitable growth”.
Net Gap Inc sales for the quarter were US$3.7 billion and gross profit was down 6 per cent to $1.34 billion.
The company ended the quarter with a merchandise inventory worth $2.24 billion – a figure 10 per cent higher than at the same time last year – but attributed that in part to the acquisition of the Janie and Jack business, increased in-transit times and net year-on-year store network growth.
Gap Inc ended the first quarter with 3849 store locations in 44 countries, of which 3335 were company-operated.