Gap reported an 8% decline in its first-quarter profit, as results were hurt by currency fluctuations and persistent sluggish sales at its Gap and Banana Republic stores.
The San Francisco-based company, however, stuck with its annual profit outlook
Gap is among the companies struggling with the impact of the strong dollar as sales in foreign currencies are worth less once they are translated back into U.S dollars. But the retailer is also grappling with uneven performance of its brands. The company’s Old Navy brand has been a bright spot, while it’s trying to turn around weak business at Banana Republic and Gap.
Under the direction of Art Peck who took over the role of CEO in February, the company has made changes in its executive ranks and is trying to appeal to a consumer who is jumping back and forth from the store to a mobile device.
The latest results show that Peck faces challenges.
The retailer reported earnings of $239 million for the three-month period ended May 2. That is down from $260 million for the year-ago period. Revenue slipped 3.% to $3.66 billion.
As reported earlier this month, revenue at stores open at least a year fell 4%. That includes an 8% drop at Banana Republic, a 10% drop at Gap and a 3% increase at lower-priced Old Navy.
“Old Navy’s performance gives me confidence — the team has hit the right formula and they are consistently delivering a truly aspirational experience that’s resonating with customers,” said Peck in a statement. “Gap remains a top priority as we focus on re-establishing the brand’s esthetic to bring to life an optimistic and elevated sense of American style.”
