The positive-negative comparable store sales (comps) trend
continues at
Gap Inc.
(
GPS
). Last week, this global fashion retailer posted a 10% rise in
comps for the four week period ended July 30, 2012 versus a 5%
decline witnessed in the comparable prior-year period. Last month,
Gap had registered flat comps (five-week period ended June 30,
2012) against a 1% increase recorded in June 2011.
The positive comps in July mainly ride on the company's solid
performances in domestic as well as global markets. Moreover, net
sales in July 2012 totaled $1.06 billion, up 12% compared with the
prior-year period sales of $950 million.
July comps at
Gap North America
spiked 13% against a 6% decline recorded in the prior-year period.
Banana Republic North America
's same-store sales were up 8% versus a 4% dip recorded in the July
last year. Results at its
Old Navy North America
segment reflected a robust 12% rise in comps compared with a 3%
fall in the prior-year period. The company's
International
business recorded a year-over-year comps growth of 4% versus 4%
decline in the year-ago period.
Second Quarter Sales Performance
During second-quarter 2012, Gap's net sales increased 6% year
over year to $3.58 billion from $3.39 billion in the previous-year
quarter. Moreover, the company registered a growth of 4% in its
comps against a 2% decline in the prior-year period.
The company's second-quarter comps mainly benefited from the
continued positive trend in its North American business. Comps for
the month of June 2012 remained positive at all Gap's segments,
except International. During the quarter, comps at the company's
Gap North America
,
Banana Republic North America
and
Old Navy North America
improved 7%, 7% and 3%, respectively. Whereas, the company's
International
business comps declined 5% year over year.
Looking ahead, bolstered by solid quarterly sales performance,
the company now anticipates second-quarter earnings to be in the
range to 47 cents - 48 cents per share compared with 35 cents
earned in the year-ago quarter. The current Zacks Consensus
Estimate stands at 48 cents per share, which coincides with the
company's higher-end guidance range. Moreover, Gap expects
inventory to be below previous guidance of flat year over year.
Year-to-Date Sales Synopsis
Year-to-date, the company's net sales increased 6% to $7.06
billion compared with $6.68 billion in the prior-year period.
Improvements in net sales were primarily driven by 4% growth in the
company's comps figure.
Gap is scheduled to release its second-quarter 2012 earnings
results on August 16, 2012.
Recently, the company's competitors, such as
Ross Stores Inc.
(
ROST
) and
Nordstrom Inc.
(
JWN
) also reported positive same-store sales for the month of July
2012. Comps growth at Ross was 7% in July, while Nordstrom recorded
0.9% growth.
We believe that Gap's long-term strategic moves along with
disciplined cost management measures will not only provide the
company with financial flexibility, but also will help it drive
value proposition. Moreover, Gap's globally recognized brands
complement one another, enabling it to leverage its position in the
sector.
Currently, Gap's shares maintain a Zacks #2 Rank, which
translates into a short-term Buy rating. Our long-term
recommendation on the stock remains Neutral.
GAP INC (GPS): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research