Gap Q1 profit, sales down, hurt by strong dollar; Old Navy continues to surge

San Francisco — Gap Inc. posted an 8% decline in its first-quarter profit amid currency fluctuations, merchandise delays from the West Coast ports slowdown, and sluggish sales at its namesake and Banana Republic stores. On a positive note, Old Navy continued its strong performance.



Gap reported earnings of $239 million for the quarter ended May 2, down from $260 million the same period a year earlier. The results met Wall Street expectations. Net sales decreased 3% to $3.66 billion compared with $3.77 billion. Currency fluctuations and merchandise delays affected sales as well as profits.



Global same-store sales fell 10% at the namesake Gap banner and 8% at the Banana Republic banner. But they increased 3% at Old Navy, coming on top of three consecutive years of growth.



“Old Navy’s performance gives me confidence – the team has hit the right formula and they are consistently delivering a truly aspirational experience that’s resonating with customers,” said Art Peck, CEO of Gap Inc..



Addressing the company’s troubled namesake brand, Peck said ”Gap remains a top priority as we focus on reestablishing the brand’s aesthetic to bring to life an optimistic and elevated sense of American style.”



The company said it expects to open about 115 company-operated stores, focused on greater China, Athleta and global outlet stores. It ended the first with 3,749 store locations in 51 countries, of which 3,309 were company-operated.