Gap's March sales fall hurt by high inventory levels

April 8
9:00 AM 2016

Gap Inc, a US-based accessories and clothing retailer, on Thursday reported its sales results for the month of March. The retailer saw a decline in March sales, which pushed the shares down around 10%. The clothing chain said that it experiences higher inventory points that hampered sale growth during the period that ended April 2, 2016.

The clothing seller reported net sales of $1.43 billion for the five-week period in March 2016, down from $1.53 billion in the same period in 2015. Gap's same-store sales for the period were down 6%, compared to an increase of 2% in the previous year period. Among the retailer's brand, Gap Global saw a 3% decline in March comparable sales, compared to a 7% decrease in the prior year period.

Banana Republic Global recorded a 14% fall in same-store sales in March 2016, compared to a 3% fall in the previous year period. Old Navy Global's comparable sales dropped 6% in March 2016, compared to a 14% increase in the corresponding period in 2015. The firm said that it expects more inventory levels to impact its gross margin rate in the first three-month period of 2016.

Chief Financial officer Sabrina Simmons said, "While March proved challenging, we remain focused on taking the necessary steps to improve results across the portfolio throughout the year." The retailer planned to release its net sales data for the April month on May 9, 2016.

According to MarketWatch, Gap's shares, which was down 35% in the previous year, dropped 9% to $25.20 during the after-hours trading session. Comparable sales at the firm's namesake stores declined 3%, compared to a 7% fall in the previous year period.

Costco Wholesale also reported its sales results for March 2016. The firm's monthly net sales amounted to $10.71 billion, up 3% from $10.40 billion in the same period in 2015. Net sales for the thirty-one week period that ended April 3, 2016, increased 2% to $68.96 billion from $67.59 billion in the previous year period.

The company's comparable sales for March 2016 was up 1%. Comparable sales from the stores in the US increased 1% while it was up 2% for the thirty-one week period. Stores in Canada recorded an increase of 3% in comparable sales, but down 6% for the thirty-one week period. Comparable sales in other foreign markets decreased 1% and 4% in March 2016 and thirty-one week period respectively.

Costco's comparable sales, excluding adverse impacts of crude prices and international exchange, increased 4% in March 2016. While comparable sales, excluding these items, for the thirty-one week period was up 5%.

Sales across the firms were impacted by many challenges in the global economy. The firms are hoping to recover from the sluggish economy that is affected by poor demand and wavering oil prices.

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