The Gap Inc.
) tumbled nearly 4.8% in the afterhours trade session yesterday
as the company posted negative sales results battered by the
harsh winter in February, which forced the closure of nearly 450
The company posted a comps decline of 7% for the 4 weeks ended
Mar 1, 2014, compared with a 3% increase in the prior-year period
(4 weeks ended Mar 2, 2013). None of the company's brands were
exceptional as comps remained negative across the board.
Comps at Gap Global were down 10% compared with a 2% increase in
the prior-year period. Old Navy Global's comps declined 6% versus
a 6% increase last year, while comps at Banana Republic Global
dipped 7%, against a 5% decline recorded last year.
Net sales for the month came in at $929 million, down 3.8% from
$966 million reported for the prior-year period.
Though the sales for the shortest month of the quarter failed
miserably, the company expects to deliver its fiscal 2014
forecasts as laid out in last week's earnings results. Gap
envisions earnings per share to lie in a band of $2.90-$2.95 for
fiscal 2014. Excluding the expected negative effect of foreign
currency, Gap anticipates operating margin to expand in fiscal
2014. Further, it forecasts inventories to advance by 7% at the
end of the first quarter of fiscal 2014.
Moreover, the company continues to deliver on its strategic
priorities with the opening of its first Gap store in Taiwan. The
company also retained its target of opening over 100 Gap stores
in the Greater China region through the end of fiscal 2014.
Although Gap had the inclement weather arising from the polar
vortex to blame for its dismal sales results, there were other
retailers which posted better results despite the weather
conditions. The polar vortex that hit most parts of the U.S. in
January and continued into February prevented shoppers from
stepping out of their homes and ultimately knocked down the
business of retailers.
However, some others including
Costco Wholesale Corp.
L Brands Inc.
) emerged winners gaining from the improved weather in late
February, which coincided with the government's tax refunds that
boosted the purchasing power of consumers. Comps for the above
mentioned companies rose 2% each for the 4 weeks ended Mar 1,
Gap currently carries a Zacks Rank #3 (Hold) and is scheduled to
release its sales results for Mar 2013 on Apr 10, 2014.
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