Gap falls 6.1% on declining sales

The multinational clothing and accessories retailer posted the net sales of $3.86 billion, fall of 3% from the sales figure of $3.97 billion it reported same quarter a year ago.

The turnaround at the core Gap retail chain remains gradual, the broker concedes, but Old Navy continues to exhibit strength, and the stock’s fortunes may have bottomed out, with only modest downward revisions to earnings per share forecasts expected from now on.

Gap (GPS – Get Report) stock is falling, down by 7.38% to $25.65 in pre-market trading on Tuesday, after the apparel company reported its October sales results. While sales at Old Navy increased 2%, sales at Banana Republic declined 15%.

“With fall behind us, the teams across our portfolio are focused on strong execution for the holiday season”, Gap CFO Sabrina Simmons said in a statement.

Gap published that its comparable store sales (Comps) for October, at locations open for at least one year, plummeted 2% throughout its brands in the given quarter. Comparable sales fell 12 percent at Banana Republic and 4 percent at Gap, the company said Monday. Its comps soared 2% last month versus flat same month previous year.

The company plans to report full third-quarter results on November 19th chief executive officer Art Peck has been working to revive sales at the struggling Banana Republic and Gap chains. “We see particular top line risk for Old Navy, whose year-to-date positive comps have partially offset negative Gap and Banana Republic performance, but who will anniversary a hard +18% comp in November and +11% in 4Q”.