Home / Knowledge / News / Apparel/Garments / Gap's Q3 earnings slip; trims Q4 forecast
Gap's Q3 earnings slip; trims Q4 forecast
20
Nov '15
It is a winter of discontent for American multinational clothing and accessories retailer Gap. The company has warned that a grim third quarter was going to bleed into an even more difficult fourth. It trimmed its earnings forecast for the year, and its shares dropped 6 per cent in after-hours trading, according to an agency report.

Gap's shares have plunged 40 per cent so far this year. On the earnings call, Gap CEO Art Peck said, “The company knows what its problems are and that we should expect better Gap and Banana Republic products this Spring.” But consumers may not wait around to find out.

For the third quarter of fiscal year 2015, Gap Inc.'s net sales decreased 3 per cent to $3.86 billion compared with $3.97 billion for the third quarter last year, Gap said in a press release. Gap's comparable sales for the third quarter of fiscal year 2015 were down 2 per cent against a similar decrease last year.

While Gap's global sales were a negative 4 per cent against -5 per cent last year, Banana Republic's global sales were a negative 12 per cent against flat sales figure last year while Old Navy's global sales rose 4 per cent against a one per cent rise last year.

Gap has been hit by high-profile departures at its subsidiaries including those of Stefan Larsson, the Old Navy brand president who went on to become CEO of Ralph Lauren, and Marissa Webb, the creative director of Banana Republic, who lasted just 18 months. Those departures have raised questions about the company's strategy,

While sales at Banana Republic stores have declined for eight of the past nine months with October sales down by 15 per cent from the year before, sales at its Old Navy stores have kept growing.

The gap between the two reflects a bifurcation seen throughout retail. Shoppers are either flocking to lower-end chains or higher-end luxury brands, while mid-line retailers get squeezed. Customers are now so trained to seek out discounts and off-price retailers for wardrobe essentials like jeans or black blazers that they no longer bother with traditional, mall-based fashion store chains, if all they are selling are basics that can be found elsewhere for cheaper, the repport said.

At Old Navy, Larsson figured out how to give personality to a brand that had grown boring. He kept the clothes cheap, but gave shoppers a reason to go there, with items like fashion jewelry and athletic wear that mimicked Lululemon's designer yoga pants and bra-tops, at a fraction of the price.

In contrast, Banana Republic hasn't been able to bring its plain-vanilla work wear more fashion-forward. It's lagging behind competitors like H&M and Zara, which are churning out fashionable styles more quickly and cheaply. Banana Republic started out as a way for Gap to serve a market looking for affordable luxury. Now it's neither affordable enough for the lower end of a divided market nor luxurious enough for the higher end. (SH)

Fibre2Fashion News Desk – India


Must ReadView All

Indian govt approves special package for leather, footwear

Textiles | On 16th Dec 2017

Indian govt approves special package for leather, footwear

The Union Cabinet chaired by PM Narendra Modi has approved a special...

EU parliament resolution calls for Cambodia sanctions

Apparel/Garments | On 16th Dec 2017

EU parliament resolution calls for Cambodia sanctions

Following the ongoing crackdown in Cambodia on the opposition and...

Affordable prices to be hit if US pulls out of NAFTA: NRF

Apparel/Garments | On 16th Dec 2017

Affordable prices to be hit if US pulls out of NAFTA: NRF

US retailers’ ability to offer consumers quality products at...

Interviews View All

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Headhonchos
Indian textile value chain

Adopt innovative techniques, go for automisation rather than being...

C Dhandayuthapani

MAG Solvics Private Limited was established in 1991 to design and develop...

Harmeet Singh

New Delhi-based Jogindra Industries Private Limited provides an assortment ...

Abhishek Pachauri

Reckon Industries adapts latest systems for manufacturing from designing...

Urs Stalder
Sanitized AG

Urs Stalder, CEO, Sanitized AG, talks about the increasing use of hygiene...

Kerem Durdag
Biovation II LLC

Kerem Durdag, CEO, Biovation II LLC, provides an insight into future...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Aditi Somani
Aditi Somani

Aditi Somani specialises in luxury fusion wear with international cuts and ...

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer <b>Prathyusha Garimella</b> is known for blending ...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

December 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
69.6%
No
12.0%
Skip
18.5%

Total Votes: 92

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
62.0%
No
30.4%
Skip
7.6%

Total Votes: 92

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.0%
No
9.8%
Skip
3.3%

Total Votes: 92

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
81.5%
No
8.7%
Skip
9.8%

Total Votes: 92


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search