Gap Inc.: the eponymous brand brings the group down in Q1

By

Matthieu Guinebault

Published
May 25, 2015

Gap Inc. is off to a bad start. The American giant saw a 4% drop in its first quarter closed at the end of April, at 3.66 billion dollars. And as the case has been over the past few months, it is Old Navy that is keeping things afloat while Gap and Banana Republic continue to flounder.

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. On a constant currency basis, net sales for the first quarter of fiscal year 2015 decreased 1 percent compared with last year.

The company noted that 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.

In addition, net sales during the first quarter of fiscal year 2015 were negatively impacted by delayed merchandise receipts at West Coast ports.

The Gap chain thus saw a 10% drop, doubling its drop for the same period last year. For Banana Republic, the fall stands at 8%, compared to just 1% a year prior.

As for Old Navy, it delivered positive 3% comparable sales results, on top of three consecutive years of growth, as customers responded favorably to the brand’s product assortments and marketing campaigns.

Additionally, during the quarter Gap Inc. distributed $329 million to shareholders through share repurchases and dividends, underscoring the company’s ongoing commitment to distributing excess cash to shareholders.