GPS Gap Inc

By Maria Armental 

Gap Inc.'s disappointing sales streak carried into August, with its Banana Republic and Gap stores reporting steeper sales declines at established stores that the retailer partly attributed to the Labor Day holiday being observed later in September than a year ago.

Over all, sales for the four-week period ended Aug. 29 fell 3% to $1.20 billion. Adjusting for currency fluctuations, however, sales would have been flat from the year-ago period, the company said.

Comparable sales, which is a key metric for retailers that in Gap's case includes sales at stores open for at least a year and online sales, declined 2%. That compares with an analyst projection on average of a 0.2% decline, according to a survey by Thomson Reuters. Last year, sales also declined 2% in August.

By brand, Old Navy remained Gap's strongest performer with a 6% sales increase for the month versus 2% a year earlier.

Meanwhile, sales at established Banana Republic stores fell 11%, compared with a 2% decline a year earlier, and sales at Gap fell 8%, compared with 6% decline a year earlier.

Analysts had projected a 3.8% increase at Old Navy and declines of 2.3% at Banana Republic and 3.4% at Gap.

The company's shares, down nearly 22% this year, fell 4% to $31.71 in late trading on Thursday.

The San Francisco company, which has more than 3,700 stores, has been trying to revamp its struggling namesake brand, following a series of fashion mis-hits and miscalculations. Last year, it appointed Jeff Kirwan to head the brand. Mr. Kirwan was previously in charge of the parent company's operations in China, one of its key growth areas.

In June, company officials said they planned to eliminate 250 corporate jobs, mostly in North America, and close 175 North America Gap stores, with the bulk--140 stores--to be closed by Jan. 30, which is the end of the company's fiscal year.

Gap has projected the planned store closings would lower its sales for the year by about $300 million. It has estimated $130 million to $140 million in restructuring charges for the year.

The retailer will report September sales on Oct. 8.

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(END) Dow Jones Newswires

September 03, 2015 17:01 ET (21:01 GMT)

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