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

Pic: Shutterstock

Apparel/Garments | On 25th Feb 2020

Tough for Vietnamese firms to follow EVFTA rules of origin

Though Vietnamese textile and garment firms are aware of the...

Pic: Walpole/Burberry

Apparel/Garments | On 25th Feb 2020

UK brands working for sustainable future with Walpole

Fourty brands have signed up for the Walpole British Luxury...

Pic: Shutterstock

Apparel/Garments | On 25th Feb 2020

Angola spends $235 mn on apparel imports in 2019

Angola spent $170 million on new imported clothes and $65 million on...

Interviews View All

Yash Maniyar, Rekha Maniyar

Yash Maniyar
Rekha Maniyar

Indian fashion market is growing at a staggering rate

Neel Sawhney, One Friday

Neel Sawhney
One Friday

‘The share of kidswear segment in the online sector is still small in...

Nitin Bhatia, Trend Arrest

Nitin Bhatia
Trend Arrest

Setting up a brand for online selling is easy, but running the brand is not

Harsh Shah,

Harsh Shah

Established in 1956 with a small beginning, Embee today manufactures a...

Eric Fessler,

Eric Fessler

Manufacturer of textile machinery and complete fibre-to-yarn lines, N...

Will Qian,

Will Qian

Honghua Digital Technology Stock Co., Ltd. specialises in the R&D,...

Ayyappa Nagubandi, Broadcast Wearables Pvt Ltd

Ayyappa Nagubandi
Broadcast Wearables Pvt Ltd

Hyderabad-based Broadcast Wearables has come up with the country's first...

Thomas Ong P S, NanoTextile

Thomas Ong P S
NanoTextile

Malaysian company NanoTextile Sdn Bhd taps into the potentials of...

Keith McMillen, Bebop Sensors

Keith McMillen
Bebop Sensors

Bebop Sensors' smart fabrics allows for a new level of interaction between ...

Seema Agrawal, Artisan Saga

Seema Agrawal
Artisan Saga

Artisan Saga, founded by Kaushik Rajani and Seema Agrawal, is an online...

Amiben Shroff, Shrujan

Amiben Shroff
Shrujan

From its modest beginning in the late 1960s, Shrujan has grown into a...

Priya Somaiya, Usha Social Services

Priya Somaiya
Usha Social Services

The Usha Silai label from Usha International is all set for a retail...

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

Leave your Comments


February 2020

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


Advanced Search