Gap reports first quarter fiscal 2019 earnings

Gap Inc. shares tanked Thursday after the apparel retailer reported quarterly earnings and sales short of Wall Street estimates, and slashed its full-year profit outlook.

The apparel retailer’s shares cratered more than 10% in after-hours trading, having closed the day at a fresh low of $20.60 not seen since June 2016.

Here’s what Gap reported for its fiscal first quarter, compared with what analysts were expecting, based on Refinitiv data:

• Earnings per share, adjusted: 24 cents vs. 32 cents, expected
• Revenues: $3.71 billion vs. $3.77 billion expected
• Same-store sales: down 4% vs. a 1.1% drop expected

CEO Art Peck called the latest quarter “extremely challenging,” saying he was “not at all satisfied” with the results. “We are committed to improving our execution and performance this year,” he said.

Same-store sales at Gap’s namesake brand were down 10%, compared with a drop of 4% a year ago. Same-store sales at Old Navy — typically the brightest spot at Gap Inc. — were down 1%, compared with an increase of 3% a year ago. Banana Republic same-store sales were down 3%, compared with 3% growth this same quarter in 2018.

The San Francisco-based retailer cut its annual profit outlook and now expects adjusted earnings per share to fall within a range of $2.05 to $2.15 this year, compared with a prior range of $2.40 to $2.55. It also forecast company-wide same-store sales to be down low single digits in fiscal 2019.

Gap also said Thursday it plans to shut 130 Gap-branded stores in the fiscal fourth quarter, part of a previously announced pruning of the namesake brand’s real estate.

The disappointing report from Gap comes as a slew of apparel retailers ranging from Canada Goose to Abercrombie & Fitch to J.Jill have reported poor earnings this week, dragging down the S&P 500 Retail ETF (XRT). That index of stocks has fallen more than 11% so far this month. Gap shares are down about 20% so far this year.

Gap shares had surged more than 20% on Feb. 28, when the retailer announced it plans to spin off its Old Navy brand into its own public company, leaving Gap’s other brands, including its namesake one, in a new, still-unnamed holding company. That deal isn’t expected to be complete until 2020.

Peck on Thursday said the retailer still “remain[s] confident in our plan to separate into two independently traded public companies.”