Gap Inc downgraded its full-year earnings forecast as sales at the company’s namesake brand continued to decline and demand for its Old Navy clothing slumped.
The apparel retailer, which operates the Gap, Old Navy, and Banana Republic stores, reduced its earnings forecast from from $2.95-$3.00 per share down to $2.73-$2.78 per share for the year ending Feb 2015.
The company reported third quarter fiscal year 2014 net income of $351 million, or $0.80 per share on a diluted basis, an 11 percent increase compared to the previous year.
Net sales dropped to $3.97 billion from $3.98 billion from a year earlier.
According to Thomson Reuters I/B/E/S, analysts expected “a profit of 79 cents per share and revenue of $4.04 billion”.
Comparable-store sales dropped by 5 percent at Gap in the third quarter and sales were flat at Banana Republic.
Comparable sales growth at Old Navy stores slowed down to 1 percent compared to 4 percent in the second quarter.
Glenn Murphy, chairman and chief executive officer, Gap Inc., said:
“As we move into the holiday season, our teams are focused on delivering unique customer
experiences which will differentiate our portfolio of brands in the marketplace,”
Gap Inc shares dropped by 4.4 percent in extended trading.
New global brand presidents
Gap Inc also announced the promotion of two of its current executives that have 35 years of combined company experience between them to become global brand presidents for Gap and Banana Republic.
Jeff Kirwan, 48, will become Global President for Gap brand in December. While Andi Owen, 49, who currently leads the Gap Outlet division, will become Global President for Banana Republic in January.
Art Peck, president of the company’s Growth, Innovation and Digital (GID) division, said:
We’ll start 2015 with a management team comprised of both established executives and the next generation of brand leaders ready for the next generation of customers,”
“We’ve provided a transition period that allows our teams to deliver a successful holiday, while gearing up for a future where great product, showcased seamlessly across physical and digital experiences, consistently delights our customers.”