By Maria Armental
Gap Inc. backed its earnings guidance for the year on Thursday
even as continued weakness at the apparel retailer's namesake and
Banana Republic brands dented its sales in the first quarter.
Chief Executive Art Peck said the company's struggling namesake
brand remains its top priority, while highlighting strength at the
cheaper Old Navy division.
"With our leadership team in place, we are making the changes
necessary to improve our long-term performance, starting with an
intense focus on greater product acceptance," Mr. Peck said.
The retailer moved to overhaul the executives in charge of its
namesake brand, changes that included the return of Wendi Goldman,
a former Banana Republic veteran who once led Victoria's Secret
Pink line and expanded the Express brand for Limited Brands Inc.
and most recently worked as chief product officer for the now
defunct C. Wonder.
Gap reported earlier this month that sales at the Gap brand's
established stores, which winnow out recently opened and closed
stores that may skew results, fell 10%, on top of a 5% drop in the
year-ago period.
Meanwhile, Banana Republic reported an 8% drop in sales at
established stores, and Old Navy again was the bright stop with a
3% increase.
"Old Navy's performance gives me confidence---the team has hit
the right formula," Mr. Peck said.
In all, sales at established stores, which include online sales,
fell 4%, compared with a 1% decrease in the year-ago period. Online
sales were $563 million for the period, down from $575 million.
Overall, Gap reported a profit for the 13 weeks ended May 2 of
$239 million, or 56 cents a share, down from $260 million, or 58
cents a share, a year earlier. That's in line with the company's
call for 55 cents to 56 cents a share.
Gap previously reported its sales fell 3% to $3.66 billion,
missing estimates. Adjusting for currency fluctuations, the company
said sales would have fallen 1% from a year earlier.
Gap affirmed its earnings projections for the year of $2.75 to
$2.80 a share and said it expects inventory in the current quarter
to be slightly up from a year earlier.
Shares, down 5% over the past 12 months, closed at $38.55.
Write to Maria Armental at maria.armental@wsj.com
Access Investor Kit for Gap, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US3647601083
Subscribe to WSJ: http://online.wsj.com?mod=djnwires