Goldman Weighs In After Gap, Old Navy And Banana Republic All Miss Estimates

Goldman Sachs trimmed its estimates and price target on Gap Inc GPS after the apparel retailer's April comps missed Street view and guided first quarter earnings below consensus.

The company's consolidated April comparable store sales fell 7 percent, missing consensus estimate of -1 percent.

All three brands missed expectations: Gap comped -4 percent (consensus +1 percent), Banana Republic comped -7 percent (consensus -6 percent), and Old Navy comped -10 percent (consensus 0 percent).

The company also provided first quarter EPS guidance of $0.31-$0.32 versus consensus $0.43, and reiterated that increased markdowns would hurt gross margins.

"Throughout FY15, the company had called out spring 2016 as a key turning point for the brand, but comps deteriorated sequentially on a 2-year basis throughout the quarter," analyst Lindsay Drucker Mann wrote in a note.

The analyst, who has a Neutral rating on the stock, cut FY16/17 EPS estimate to $2.14/$2.24 from $2.20/$2.36 based on weaker sales and gross margin, offset by expense savings. Street expects earnings of $2.17 a share for 2016 and $2.34 a share for 2017.

The analyst also trimmed the price target on the stock to $22 from $24.

Shares of Gap fell 11.51 percent to $19.30. The stock touched a new 52-week low of $18.98 following disappointing sales results from the retailer.