Traffic Issues Continue To Plague The Gap
Gap Inc’s (NYSE: GPS) July comps missed expectations and the traffic trends remain challenged, Cowen’s Oliver Chen said in a report. He maintained a Market Perform rating on the company, with a price target of $25.
Tough July Comps
Gap’s overall comp declined 4 percent in July, versus Street expectation of a 1 percent decline. On a 2-year basis, July was at -7 percent, June at +1 percent and May at -7 percent.
Gap Global was down 4 percent, versus the consensus estimate of 1.5 percent. Banana Republic Global recorded a decline of 14 percent, as compared to Street expectation of -4.6 percent. Old Navy came in flat, versus expectations of +1.1 percent.
Gap announced its adjusted EPS guidance for 2Q16 at $0.58-$0.59, ahead of the Street estimate of $0.48.
“Management noted that performance varied during the quarter, with progress made on streamlining initiatives and continued to see improvement at the larger brands. Excluding the previously announced impact from store closures and streamlining measures, ($0.28) and the impact from a higher tax rate, GPS expects 2Q adj. EPS to be in the range of $0.58 to $0.59, vs. the Street at $0.48,” Chen wrote.
Performance in Q2 was inconsistent and traffic challenged during May and July. Chen added that while the fall weather could be a positive catalyst, Gap continues to be cautious on the retail environment in the back half of the year.
Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email email@example.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
Latest Ratings for GPS
|Oct 2016||Deutsche Bank||Upgrades||Sell||Hold|
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.