Gap back on form as December comps rise but Banana Republic still struggles
Gap Inc had some long-awaited good news on Thursday as its same-store sales finally rose, and with analysts having expected another fall, its shares rose too.
But it wasn’t all good news during the holiday season as the beleaguered Banana Republic chain continued to see falling sales in December.
So what happened company-wide? Gap Inc’s total net sales for the five-week period rose 3% to $2.07bn and its comp sales rose 4% - so much better than the 5% fall of a year ago.
Within that figure, the Gap chain’s comps rose 1% globally (beating a 2% dip a year ago), while Old navy soared 12% versus a 7% drop this time last year. But Banana Republic was down a worrying 7%, adding further pain after a 9% fall in the same month of 2015.
For the November and December holiday season as a whole, the company said its net sales rose 1% and its comp sales rose 2%.
Despite the Banana Republic woes, CFO Sabrina Simmons was unsurprisingly upbeat as she focused on the other two chains. “We’re pleased with the improved momentum we saw over the holiday season, driven primarily by a positive customer response at Gap and Old Navy,” she said. “Based on these results, we now expect full-year adjusted earnings per share to be modestly above the high end of our previous adjusted guidance range of $1.92.”
Gap is one of the giants of the fashion retail world but has struggled for some time to return to sustained growth. Old Navy has frequently been the star performer as it was in December. But the company will have been pleased to see a return to growth for the signature Gap chain. However, Banana Republic remains the company’s biggest problem and its downward slide shows no signs of slowing or reversing.
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