The Gap (GPS) Reports Flat Comps in Sept.

The Gap (NYSE: GPS) reported that September 2014 net sales were up 1 percent compared with last year. Net sales for the five-week period ended October 4, 2014 were $1.48 billion compared with net sales of $1.46 billion for the five-week period ended October 5, 2013.

“September proved to be more challenging than we expected,” said Glenn Murphy, chairman and chief executive officer, Gap Inc. “While Old Navy and Banana Republic are performing well, we are working aggressively to ensure our entire portfolio of brands delivers to its potential.”

September Comparable Sales Results

Gap Inc.’s comparable sales for September 2014 were flat versus a 3 percent decrease last year. Comparable sales by global brand for September 2014 were as follows:

• Gap Global: negative 3 percent versus negative 3 percent last year
• Banana Republic Global: positive 2 percent versus negative 5 percent last year
• Old Navy Global: positive 1 percent versus negative 2 percent last year

The company noted that it expects gross margins for the third quarter of fiscal year 2014 to be moderately below the prior year driven by underperformance at Gap brand. In addition, after having leveraged operating expenses by 1 percentage point in the first half of fiscal year 2014, the company continues to manage expenses tightly. However, as noted during the company’s second quarter 2014 earnings call, there are a number of factors that make year-over-year expense comparisons more difficult in the second half of fiscal year 2014. As a result, the company expects third quarter fiscal year 2014 operating expenses to be approximately 8 percent above the third quarter of fiscal year 2013.

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