Old Navy floats Gap's boat again

The CEO of Gap Inc. says efforts to improve "product acceptance" at Gap and Banana Republic stores is a work in progress that continues to drain on the company's financial results, which included an 8% decline in its first-quarter profit.



Gap Inc. CEO Art Peck, speaking a conference call with investors, also blamed currency fluctuations and merchandise delays from the West Coast ports slowdown for the drop.



On a positive note, Old Navy continues its strong performance for the company.



"Q1 comp was a women's story and I'm saying that in particular because as we have struggled with our women's business in Gap, as an example, Old Navy is an excellent example where we continue to get women's right season after season and we're very pleased with the performance that we're seeing with on-brand, on-trend product in our stores," Peck said. "Product acceptance at Gap in the women's business has been tough and we're focused on making it happen. At Banana Republic, it's a work-in-process and we have work to do there as well."



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,” Peck added.



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.