Gap Posts In-Line Q3 Earnings, But Lowers Annual Profit Outlook

reported in-line earnings for the third quarter on Thursday. However, the company reported downbeat quarterly sales and trimmed its full-year earnings guidance. The San Francisco, California-based company reported a quarterly profit of $248 million, or $0.61 per share, versus a year-ago profit of $351 million, or $0.80 per share. Excluding items, the company's earnings came in at $0.63 per share. Its net sales slipped 2.9 percent year-over-year to $3.86 billion. However, analysts were expecting earnings of $0.63 per share on revenue of $3.92 billion. Company-wide comparable sales slipped 2 percent for the quarter. Comparable sales at Gap brand dropped 4 percent in the quarter. Comparable sales at Banana Republic dipped 12 percent, while comparable sales at Old Navy rose 4 percent in the latest quarter. Its gross margin shrank to 37.3 percent from 40.2 percent. Operating expenses slipped to $1.03 billion from $1.04 billion. Online sales increased 2.3 percent to $635 million in the quarter. Gap ended the quarter with $1.04 billion in cash and cash equivalents. "With a challenging third quarter behind us, we are sharply focused on holiday execution across all channels," said Art Peck, chief executive officer, Gap Inc. "We are driving forward on our key strategies designed to fuel future growth." Gap now expects full fiscal year 2015 adjusted earnings of $2.38 to $2.42 per share, versus earlier outlook of $2.75 to $2.80 per share. Gap shares declined 1.61 percent to $24.68 in the after-hours trading session.