American clothes company Gap has not managed to live up to the first quarter expectations of analysts, despite surpassing those in the previous 31 quarters. Only its Old Navy brand managed growth.
Like-for-like turnover dropped
Gap's total turnover dropped 3 % to 3.6 billion dollars (3.32 billion euro), while its net profit also dropped to 329 million dollars (299 million euro). That 8 % drop is partly attributed to exchange rate fluctuations.
Both its Gap and Banana Republic brands had to deal with lower like-for-like turnover. Banana Republic's turnover dropped 8 % in the past quarter, while Gap's dropped even more, 10 %.
Only its cheaper Old Navy brand managed positive results, with a 3 % like-for-like turnover growth. For the entire company, like-for-like sales dropped 4 %.
Art Peck, Gap's new CEO since February 2015, saw it coming, but says he expects improvements in next year's results. "Old Navy's performance gives me confidence — the team has hit the right formula and they are consistently delivering a truly aspirational experience that's resonating with customers. Gap remains a priority and we will emphasize the rediscovery of its optimism and fresh American style the brand was known for", Peck said.