GPS Gap Inc

By Josh Beckerman 

Gap Inc. said its core sales declined 2% in February, hurt by another double-digit drop at its Banana Republic chain.

For the four weeks ended Feb. 27, comparable sales were flat at the Gap and Old Navy brands but declined 11% at Banana Republic, on top of a 5% drop last year.

Comparable sales, which Gap defines as stores open for at least a year along with online sales, are a key metric for retailers, stripping out the effect of recently opened or closed stores.

The company said it has been encouraged by the response to spring products at its flagship brand and remains focused on improving results across its portfolio.

Gap has been trying to revamp its namesake brand. The company last year brought on new leadership-- including former Banana Republic veteran Wendi Goldman, who had led Victoria's Secret's Pink line--and said it would lay off workers and close stores as part of a broader cost-cutting move.

In January, Banana Republic posted a 17% core sales decline, with smaller declines at Gap's other two main brands.

Retailers have faced challenges recently, including unusually warm weather that has reduced demand for coats, sweaters and other winter gear. In addition, tourists visiting the U.S. are spending less due to a stronger dollar. These issues have prompted some retailers to cut prices to attract shoppers.

Last week, Gap said it expects its profit to decline this year and said it would reduce capital spending and buy back fewer shares as it looks to pay down debt.

In after-hours trading, Gap's shares were flat at $28.54.

Write to Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

March 03, 2016 17:26 ET (22:26 GMT)

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