GAP CLOTHING INC. REPORTS DECEMBER SALES DOWN 5 PERCENT; COMPARABLE STORE SALES DOWN 9 PERCENT
Gap Inc. (NYSE: GPS) today reported net sales of $2.4 billion for the five-week period ended December 31, 2005, which represents a 5 percent decrease compared with net sales of $2.6 billion for the same period ended January 1, 2005. The company’s comparable store sales for December 2005 decreased 9 percent compared with a 1 percent decrease in December 2004.
Comparable store sales by division for December 2005 were as follows:
· Gap North America: negative 10 percent versus positive 1 percent last year
· Banana Republic North America: negative 5 percent versus negative 2 percent last year
· Old Navy North America: negative 10 percent versus negative 1 percent last year
· Gap International: negative 3 percent versus negative 8 percent last year
“During December, traffic trends at all three brands continued to drive negative comparable store sales,” said Sabrina Simmons, Senior Vice President, Treasury and Investor Relations. “However, we are pleased that fewer markdowns in the month resulted in merchandise margins slightly above those of last year.”
Year-to-date net sales of $15.1 billion for the 48 weeks ended December 31, 2005, decreased 2 percent compared with net sales of $15.4 billion for the same period ended January 1, 2005. The company’s year-to-date comparable store sales decreased 5 percent compared with a 1 percent increase in the prior year.
In addition, the company remains comfortable with the annual earnings per share guidance that it provided in its third quarter earnings release of $1.12 to $1.17, and through December, the company is trending to the upper-end of this range.
As of December 31, 2005, Gap Inc. operated 3,126 store locations compared with 3,049 store locations last year.
Gap earnings fall
Gap Inc. delivered a largely anticipated weak third-quarter earnings report Thursday due to disappointing customer response to fall merchandise and less people visiting its retail outlets.
The company said because November traffic levels have deteriorated more than expected, it sharply lowered full-year earnings expectations to below Wall Street estimates.
In the three months ended Oct. 29, Gap earned $212 million compared with $265 million a year ago.
Revenues fell 3 percent to $3.86 billion, and consolidated same-store sales were down 7 percent. Year-to-date, the specialty retailer had earnings of $775 million from $772 million, a year ago. Revenues fell slightly to $11.2 billion from $11.37 billion.
Gap maintained that its merchandising issues are "fixable" and that it is taking "aggressive" actions to resonate again with customers. Gap said on a post-earnings conference call that it will focus on the three fundamentals of retailing: product, including providing key merchandise items to deliver its "fresh, casual, American-style" aesthetic; store experience, including visual displays, customer service and remodels, and marketing, including its holiday "magalogue" and appropriate television and print campaigns.
Paul Pressler, president and chief executive officer of Gap Inc., said on the conference call that, during the past two years, Gap focused on building critical infrastructure and operating efficiencies "at the expense of creating amazing product and a compelling store experience." Now, he said, the company is "100 percent focused on the customer and improving product and the in-store experience."
18 November 2005