Gap’s eponymous brand reported a larger than expected sales drop offsetting otherwise positive sales and sending shares diving.
In the 13 weeks to August 4 the group, which also includes brands Old Navy, athleisure brand Athleta and Banana Republic, saw comparable sales rise two per cent coming comfortable above analysts’ expectations of 1.5 per cent while profits rose 10 per cent.
Despite net sales jumping eight per cent to $4.1 billion, ahead of estimates, share prices dropped nearly seven percent in after-market trading on Thursday.
It reported a net income of $297 million (£231 million), up from $271 million (£210 million) a year prior.
Sales across the group’s Old Navy brand rose five per cent over the quarter, with overall revenues jumping 13 per cent to $2 billion (£1.55 billion).
Banana Republic, which closed all its UK stores in 2016, saw comparable sales jump two per cent.
However, Gap’s namesake brand served to offset this growth, seeing a five per cent drop in sales, well above the 2.5 per cent drop expected.
“We delivered our seventh consecutive quarter of positive comparable sales growth, led by the strength of Old Navy,” said chief executive Art Peck.
“Our balanced growth strategy supports continued growth and improved profitability, and our investments are focused on leveraging the advantages of our scaled operating platform and accelerating the impact of our significant data assets.”