Gap cuts profit forecast as demand slows for Old Navy brand

Tuesday, 25 November 2014 00:30 - - {{hitsCtrl.values.hits}}

Reuters: Apparel retailer Gap Inc cut its full-year earnings forecast as sales at the Gap brand continued to fall and demand for the cheaper Old Navy clothing slowed.

Comparable-store sales fell 5% at Gap in the third quarter ended Nov. 1 while sales were flat at Banana Republic. Comparable sales growth at Old Navy stores slowed to 1% from 4% in the preceding quarter. Old Navy brand was Gap’s strong point in North America even when demand for its premium brands cooled. The company cut its earnings forecast to $2.73-$2.78 per share from $2.95-$3.00 per share for the year ending February 2015. Apparel sales in North America have been slowing as retailers slash prices to attract shoppers at a time when consumers cut back on discretionary spending. Gap’s net income rose to $351 million, or 80 cents per share, in the third quarter from $337 million, or 72 cents per share, a year earlier. The company said net sales fell slightly to $3.97 billion from $3.98 billion from a year earlier. Analysts on average had expected a profit of 79 cents per share and revenue of $4.04 billion, according to Thomson Reuters I/B/E/S.