Gap said that first quarter diluted earnings per share were 0.32 dollar. Total company net sales were 3.44 billion dollars and comparable sales were down 5 percent. Gap also provided an update on the strategies outlined on May 9, 2016 to better position the company for improved business performance and to build for the future, which includes closing of non-performing Old Navy and Banana Republic stores.

“As the pace of change across the apparel industry increases, now is the time to accelerate our transformation by scaling our product and operating capabilities across our global portfolio,” said Art Peck, CEO, Gap, adding, “By taking every opportunity to exploit our strategic advantages, our brands will be able to more fully harness the power of the enterprise to better serve their customers across channels and geographies.”

Announces strategy for long-term growth

As part of Gap’s continued commitment to better position the company for long-term growth, the company has announced measures. As a part of the plan, Old Navy will strategically shift its focus to markets most favourable to the brand’s growth, resulting in the closure of its fleet of 53 stores in Japan in fiscal 2016. Old Navy’s near-term growth ambitions will be anchored in North America, including its most recent debut of company-operated stores in Mexico, as well as China and its global franchise operations.

Japan remains an important market for Gap’s portfolio, with a continued strong presence of more than 200 Gap and Banana Republic stores. Additionally, the company expects to close select Banana Republic stores, primarily internationally, in fiscal year 2016. In total, the company expects to close about 75 stores related to these measures.

First quarter comparable sales results

Gap’s comparable sales for the first quarter were down 5 percent versus a 4 percent decrease last year. Comparable sales at Gap Global were negative 3 percent versus negative 10 percent last year, at Banana Republic Global, negative 11 percent versus negative 8 percent last year, Old Navy Global: negative 6 percent versus positive 3 percent last year.

The company said translation of foreign currencies into US dollars negatively impacted the company’s reported net sales for the first quarter by about 20 million dollars. The company is not reaffirming its earnings per share guidance for fiscal year 2016 since trends in the apparel retail environment need to improve from the first quarter of fiscal year 2016 in order to achieve this estimate.

The company ended the first quarter of fiscal year 2016 with 3,727 store locations in 52 countries, of which 3,276 were company-operated. During the first quarter, the company opened 18 and closed 17 company-operated stores.

picture:gapinc.com