Just when it looked like Gap Inc. (NYSE: GPS) was starting to bottom out, it appears that was only a resting point. Thing go from bad to worse. Gap Inc. March Comparable same store sales came in at -18% with a total company store sales down 12%. We were only looking for -7.7% to -8%.
Old Navy, which we have referred to as one of the lamest brands in the country, posted same store sales of -27%. We have taken some heat for saying this dog of a chain should be spun out of the company. No one would likely buy it, so that’s the only hope here. There is a reason we said this may be one of the larger US brands that disappears.
Its core Gap Stores in North America showed a -14% drop in same store sales, while Banana Republic showed comparable store sales of -8%.
The company has somehow "reiterated" that it expects diluted earnings per share of $1.20 to $1.27 for fiscal year 2008 (Jan-09), which we find surprising given the drag this morning. First Call has estimates at $1.26 EPS. With a major drop like this, that may be very Panglossian of the company.
Gap Inc. shares are down 4%at $18.12 in pre-market trading.
Jon C. Ogg
April 10, 2008
Jon Ogg produces the Special Situation Investing Newsletter. He can be reached at firstname.lastname@example.org and he does not own securities in the companies he covers.