Gap Reports Drop in March Sales, High Inventory Levels -- Update
08 April 2016 - 8:30AM
Dow Jones News
By Maria Armental
Gap Inc.'s woes continue to mount, as the struggling apparel
retailer warned that weak sales in March have left it with too many
unsold goods that will squeeze profits.
The company on Thursday said sales at stores open at least a
year fell 6% in the five weeks ended April 2, and it is entering
April with more inventory than anticipated. The excess merchandise
is expected to "pressure its gross margin rate" for the first
quarter of the fiscal year, the retailer said.
The company released the news after markets closed. Shares,
which fell 4% to $27.69 in 4 p.m. trading, fell as much as 10% in
late trading. The stock has fallen about 35% over the past 12
months.
Gap has been trying to reinvigorate its namesake brand. The
company brought back former Banana Republic veteran Wendi Goldman
last year to help with product design. As part of cost-cutting
measures, the company has also slashed its workforce and closed
dozens of stores.
"While March proved challenging, we remain focused on taking the
necessary steps to improve results across the portfolio throughout
the year," the company's finance chief, Sabrina Simmons, said in a
news release.
Analysts have cautioned that the company's main brands, Gap and
Banana Republic, have lost relevance with younger shoppers. The
company is also being squeezed by fast-fashion retailers such as
H&M and a shift to online shopping.
Gap said it generated revenue of $1.43 billion in the five weeks
ended April 2, compared with $1.53 billion in the same period a
year earlier. Comparable sales declined 3% at the Gap brand, 14% at
Banana Republic and 6% at Old Navy.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com
(END) Dow Jones Newswires
April 07, 2016 18:15 ET (22:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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