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Gap, the largest US clothing retailer, continued its dismal performance in February, reporting recently an 11 per cent drop in same-store sales.
The fall was worse than Wall Street's consensus expectations of a decline of about 5.0 per cent.
Gap said its total sales fell 6.0 per cent to $865m and that store traffic was also down. The slump comes in spite of the launch of new spring lines at its Gap brand and Old Navy stores that were designed to lead a turnaround in the company's performance.
In North America, comparable-store sales fell 7.0 per cent at Gap, 11 per cent at Banana Republic and 14 per cent at Old Navy. Customer traffic also dropped at each of the three chains, with a decline of 12 per cent at Gap, 15 per cent at Banana Republic and 11 per cent at Old Navy. The company said Gap International comparable sales fell 14 per cent.
Paul Pressler, Gap's chief executive, said recently that the company believed it would take one to two quarters for its new fashion focus to be reflected in increased sales and traffic.
Overall, February's heavy snowfalls and cold weather across the northern US contributed to sluggish sales growth for the month at many big US chain stores, according to the latest figures.
Retail Metrics, which tracks the monthly sales figures, said 60 per cent of the retailers in its monthly same-store sales index fell short of forecasts. The firm said this was a "significant drop" from January and December, when 74 per cent and 65 per cent of retailers beat estimates.
Retail Metrics also noted that teenage-clothing retailers turned in "surprisingly disappointing results" with a mere 2.5 per cent gain, against the 14 per cent seen in January. Teen and youth fashion retailers have been some of the strongest performing in the industry. Wal-Mart, the world's largest retailer, confirmed an overall increase in sales at stores open at least a year of 3.2 per cent, boosted by a 21.2 per cent increase in international sales as a result of its acquisition of a majority stake in Seiyu, the Japanese department store chain.
But sales at its Wal-Mart US stores rose only 2.9 per cent, against last year's increase of 4.2 per cent.
Target, its main rival, said its same-store sales rose 3.6 per cent, in line with its expectations. Wal-Mart and Target issued a cautious forecast for sales in March of 1.0 to 3.0 per cent, as a result of the Easter holiday falling this year in April.
However, Federated Department Stores, the largest US department store chain, said sales rose 1.0 per cent during the month, better than Wall Street had expected. Terry Lundgren, chief executive, said sales at Macy's and Bloomingdale's "were encouraging and above our guidance".
Under syndication arrangement
with FE
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