Gap, Inc. (GPS) April Comps Fell 12%

Gap, Inc. (NYSE: GPS) reported that April net sales were $1.21 billion for the four-week period ended May 2, 2015, compared with net sales of $1.33 billion for the four-week period ended May 3, 2014. For the first quarter of fiscal year 2015, Gap Inc.’s net sales decreased 3 percent to $3.66 billion compared with $3.77 billion for the first quarter last year.

The translation of net sales in foreign currencies into U.S. dollars negatively impacted the company’s reported sales for the first quarter of fiscal year 2015 by about $90 million, primarily due to the weakening Japanese yen and Canadian dollar. On a constant currency basis, net sales for the first quarter of fiscal year 2015 decreased 1 percent compared with last year. In calculating the net sales change on a constant currency basis, current year foreign exchange rates are applied to both current year and prior year net sales. This is done to enhance the visibility of underlying sales trends, excluding the impact of foreign currency exchange rate fluctuations.

“Old Navy delivered another quarter of positive comps – building on its track record of three consecutive years of growth,” said Sabrina Simmons, chief financial officer, Gap Inc. “We remain focused on driving improved performance across our other divisions.”

As the company previously noted, the earlier timing of the Easter holiday, as compared to last year, benefited the company’s March sales results and negatively impacted its April sales results.

April Comparable Sales Results

Gap Inc.’s comparable sales for April 2015 were down 12 percent versus positive 9 percent last year. Comparable sales by global brand for April 2015 were as follows:

• Gap Global: negative 15 percent versus positive 3 percent last year
• Banana Republic Global: negative 15 percent versus positive 7 percent last year
• Old Navy Global: negative 6 percent versus positive 18 percent last year

First Quarter Comparable Sales Results

Gap Inc.’s comparable sales for the first quarter of fiscal year 2015 were down 4 percent versus negative 1 percent last year. Comparable sales by global brand for the first quarter were as follows:

• Gap Global: negative 10 percent versus negative 5 percent last year
• Banana Republic Global: negative 8 percent versus negative 1 percent last year
• Old Navy Global: positive 3 percent versus positive 1 percent last year

First Quarter Guidance

The company expects diluted earnings per share for the first quarter of fiscal year 2015 to be in the range of $0.55 to $0.56. The company’s first quarter fiscal year 2015 diluted earnings per share range includes a benefit of about $0.02 related to a reversal of interest expense from the favorable resolution of tax matters in the quarter.

*** The Street sees Q1 EPS of $0.55.

The company noted that it expects inventory dollars per store for the first quarter of fiscal year 2015 to be up about four percent versus last year.

Additional insight into Gap Inc.’s sales performance is available by calling 1-800-GAP-NEWS (1-800-427-6397). International callers may call 706-902-4949. The recording will be available at approximately 1:00 p.m. Pacific Time on May 11, 2015 and available for replay until 1:00 p.m. Pacific Time on May 15, 2015.

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