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NEW YORK, United States — Gap Inc., the biggest U.S. apparel-focused retailer, forecast profit this year that trailed some analysts' estimates as the company tries to revive sales.
Profit in the current fiscal year will be $2.20 to $2.25 a share, including a 19-cent drag from foreign-exchange effects, the San Francisco-based company said in a statement Thursday. Analysts estimated $2.44, on average, with projections ranging from $2.09 to $3 a share.
The forecast signals Gap is struggling with its plan to reignite growth. On top of a longer-term trend of consumers spending less on clothing, unseasonably warm weather and a strong U.S. dollar have weighed on results. The company's lower-price Old Navy chain had propped up the business, but has shown signs of slowing recently. Comparable sales, a key measure for retailers, fell 8 percent at Old Navy in the fourth quarter from the same time a year earlier.
Gap shares fell 0.7 percent to $27.40 at 4:15 p.m. in late trading in New York. The stock plunged 41 percent last year.
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Profit in the quarter ended Jan. 30 was 57 cents a share, excluding some items. That matched analysts’ estimates, after Gap gave preliminary results of 56 cents to 57 cents earlier this month. Net income tumbled 33 percent to $214 million.
For the Gap brand, sales online and at stores open at least a year slipped 3 percent last quarter, the company said earlier this month. By that measure, sales plunged 14 percent at the Banana Republic chain.
Chief Executive Officer Art Peck, who took the job a year ago, has reshuffled management to try to boost performance at the Gap and Banana Republic brands. He has said his comeback plan will begin to pay off in the spring. The company lost Old Navy President Stefan Larsson to Ralph Lauren Corp. last year, putting additional pressure on management.
By Lindsey Rupp; editors: Nick Turner and Kevin Orland.
