Gap posts double-digit growth in sales and profits in first quarter
The fourth largest fashion retailer in the world closed 39 stores during the period and opened 62 new retail locations, mostly Old Navy and Banana Republic.
Gap disappoints investors despite registering double-digit growth. After years immersed in a restructuring process, the fourth largest fashion retailer in the world ended the first quarter with both sales and profits going up.
The company, led by Art Peck, registered revenues of 3.783 million dollars (3.227 million dollars) between February and April, a 9.97% increase compared to the previous year. Gap’s net income raised 14.68% to 164 million dollars (139.9 million euros).
Like-for-like sales, however, went up only 1%, below 1.9% forecasted by analysts. Gap shares fell 8.4% yesterday after the results presentation.
Old Navy slowed down significantly, going from an 8% sales increase on a comparable area in the first quarter of 2017 to 3% in the same period of this year. The Gap chain went from falling by 4% in early 2017 to grow by 4%. Banana Republic comparable sales went up 3%, compared to a 4% drop in the first three months of the previous year.
Gap like-for-like sales grew only 1%, below analysts’ forecasts
“We are pleased to have delivered our sixth consecutive quarter of positive comp growth, despite the expected challenges at Gap brand,” said Art Peck, president and chief executive officer, Gap Inc. “Our balanced growth strategy provides the right foundation to differentiate our portfolio of brands in this retail environment, with strategic investments in value, active and digital fueled by productivity opportunities unique to our scaled operating platform.”
The company is focusing efforts on Old Navy, which represents most of group revenues, and Athelta. In the first quarter, Old Navy posted 1,590 million dollars, 11.71% more. Gap also achieved sales growth, but at a lower rate, after several quarters of falling revenues. The retail chain increased its turnover by 3.96% to 1.204 million dollars (1,027.2 million euros).
Banana Republic grew by 9.09% to 564 million dollars (481.2 million euros) and the other brands business segment (which includes Athleta) increased by 33% up to 270 million of dollars (230.4 million euros).
On May 5, 2018, the company operated with 3,617 stores in more than ninety countries, compared to 3,594 shops at the beginning of the quarter. During the period, the group opened 62 new stores and closed down 39 retail properties.
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