Gap Falls After Sales Miss Estimates as Storms Close StorLindsey Rupp
Gap Inc., the biggest U.S. apparel-focused retailer, fell after reporting February sales unexpectedly declined.
The shares dropped 2.7 percent to $41.16 at 9:35 a.m. in New York. Gap had climbed 8.2 percent this year through yesterday, compared with a 1.6 percent increase for the Standard & Poor’s 500 Index.
Sales at stores open at least a year were down 7 percent in February, compared with a 3 percent gain in the same period a year earlier, the San Francisco-based retailer said in a statement yesterday. The results missed analysts’ estimates of a 1.1 percent increase.
The unexpected drop may be in part a result of severe weather. Storms in the northeast and Midwestern regions of the U.S. as well as in Japan forced more than 450 stores to close for at least one day in February, Katrina O’Connell, vice president for investor relations, said in a recorded call. Sales were weakest in the second week of February and strongest in the final week as weather improved, O’Connell said on the call.
“It was a tough start to the season for Gap,” Howard Tubin, a New York-based analyst at RBC Capital Markets, said in an e-mail yesterday. “Weather was clearly an issue.”
Tubin has the equivalent of a hold rating on the shares.
Chief Executive Officer Glenn Murphy is working to maintain sales growth as apparel retailers slash prices to try to lure shoppers into malls. As frigid weather persisted in much of the U.S., Gap forecast earnings per share in its current fiscal year of as much as $2.95 in a Feb. 27 release, below analysts’ estimates for $3.03 a share.
So-called same-store sales at the Gap brand declined 10 percent in February, missing analysts’ estimates for a 1.4 percent gain. Comparable sales at Banana Republic fell 7 percent last month, more than the 0.1 percent decrease analysts’ predicted. Sales at Old Navy slipped 6 percent compared to analysts’ estimates for a 0.7 percent increase.