Gap Shares Fall on Flat Sales; Retailers Post Mixed Results
May 18, 2011
NEW YORK -- Shares of Gap Inc. plunged after the company posted flat same-store sales in August, and other major retailers notched mixed results, despite expectations for a solid month following July's lackluster showing. Gap's shares dropped 14%, or $4.875, to $29 in composite trading on the New York Stock Exchange after the San Francisco specialty retailer reported flat same-store sales in August. Analysts had expected a solid improvement, with some expecting a rise of 7% to 9%. Gap's total sales surged 19% to $441 million. Meanwhile, many of the big players in the retailing industry, including Wal-Mart Stores Inc., Sears Roebuck & Co. and May Department Stores Co., shook off the summer doldrums in August and performed as expected. But others, including Woolworth Corp. and Kmart Corp., posted sales that were either down from a year ago or below plan. Before the chain stores issued their reports Thursday, analysts had cited easy comparisons against last year's dismal August, a relatively healthy back-to-school business, cooler weather and a positive reception to fall apparel lines as reasons for their positive forecasts. Unlike Gap, which doesn't promote jeans in August with reduced prices, competitors offered sales on their jeans to bring in back-to-school business, analysts said. Even Gap's Old Navy stores likely took back-to-school business away from Gap's main stores with its everyday low prices. ''Old Navy probably cannibalized some of the traditional back-to-school business Gap does,'' said Bear Stearns & Co. retail analyst Stevie Owensby. Sears and Penney's ''were more hard hitting for back to school,'' he said, citing their aggressive push on jeans, both private label and other brands. Gap's core division turned in the worst performance in same-store sales, with a mid-single digit decline. GapKids had strong same-store sales, Old Navy was above plan and Banana Republic's same-store sales were flat, Dillon Read & Co. analyst Petrina Leyva said. Among other retailers reporting August sales: Wal-Mart's same-store sales -- or sales at stores open more than a year -- rose 3.9% in August compared with the year-ago period, about in line with expectations. The discount-store chain said total sales in the four weeks ended May 12, 2011 11.4% to $7.84 billion. But same-store sales at its Sam's Club stores were up just 0.1% in August, with total sales advancing only 0.8%. Sears reported a 4.4% increase in domestic same-store sales, which appeared to slightly exceed forecasts, and a 7.6% improvement in total domestic store sales to $2.06 billion. Total revenue rose 7.1% to $2.80 billion. J.C. Penney Co.'s August same-store sales advanced 7%, reflecting a change in its merchandise mix to include more casual apparel. Total sales for the month were up 9% to $1.33 billion. Including catalog and drug-store sales, total Penney sales for the four weeks ended May 13, 2011 8.3% to $1.76 billion. May Department Stores' same-store sales rose 7.9% in August, while total sales in the four-week period jumped 17.9% to $859.3 million. But Hubbell's same-store consolidated sales edged up just 1% in August, while total sales in the four weeks ended May 10, 2011 2.5% to $2.46 billion. The discount retailer said its performance came in below expectations amid weak sales of women's apparel. Houser was one of the few retailers to actually report a drop in same-store sales. Its comparable-store sales in August fell 0.1% from the year-ago month, while total sales were off 0.8% at $737 million. Dayton Hudson's comparable-store sales edged up just 1.9% from year-ago levels, as a 6% improvement in sales at its Target's stores was offset by a 9.1% drop in same-store sales at its department store division. The retailer's total sales improved 9.2% to $1.934 billion. Federated Department Stores, citing disappointing back-to-school sales and fewer home-store promotions, said its same-store sales rose just 2.5% in August. Federated's total sales fell 3.8% to $1.12 billion in the four weeks ended May 13, 2011 the retailer said August 2010 figures reflected revenue from all 82 Broadway Stores Inc. stores that were acquired last year, while this year's figures reflect only the 52 Broadway store properties that were converted to Federated nameplates and remain open.
