GPS Gap Inc

By Tess Stynes 

Gap Inc. said its comparable sales fell a steeper-than-expected 4% during July on declines at its Banana Republic and namesake brands.

Shares, down 27% in the past 12 months, fell 4.8% to $24.40 in recent after-hours trading despite the apparel retailer's per-share earnings view for the latest quarter, which was better than expected.

For the four weeks ended July 30, Gap said comparable sales fell 14% at Banana Republic and 4% at its namesake brand.

Analysts polled by Thomson Reuters had expected Gap's overall comparable sales to decline 0.3% last month, including a drop of 3.9% at Banana Republic and a decrease of 1.4% at its namesake brand. Comparable sales were flat at Old Navy during July, compared with analysts' estimates for an increase of a 1.6%.

"While performance varied during the quarter, we made progress on our streamlining initiatives and continued to see signs of improvement in our larger brands," Chief Financial Officer Sabrina Simmons said.

For the latest quarter, Gap expects adjusted per-share earnings of 58 cents to 59 cents, above analysts' expectations of 48 cents a share.

Gap said its comparable sales fell 2% during the quarter and preliminary net sales were $3.85 billion. Analysts had expected revenue of $3.78 billion.

In May, Gap warned of weak sales across its brands and said it would take steps to streamline its business, including evaluating its Banana Republic and Old Navy operations outside North America.

Gap has been squeezed by fast-fashion retailers such as H&M owner Hennes & Mauritz AB and Zara owner Inditex SA, which push low-price items and shift their selections quickly. To combat the sales slump, Gap CEO Art Peck has brought in new executives and promised to source goods more quickly. The company has also been shrinking its footprint by closing dozens of locations.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

August 08, 2016 17:55 ET (21:55 GMT)

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