Gap Sees Traffic Slow, Guidance Below Street

Gap said Thursday that “challenging traffic trends” were in place into the holiday season and reaffirmed earnings guidance for the full year that fell below Street expectations.

Investors sent the shares down nearly 5 percent in after-hours trading in the wake of results that were deemed by shareholders to be disappointing.

The retailer said that earnings per share came in at $0.60, excluding items, which just met forecasts and management guidance. Sales were also in line at $3.8 billion. Earlier this year, management had said a sales rebound might be in the offing this spring, but that now seems to be a diminishing possibility. Bloomberg noted Friday that sales are still sluggish at Banana Republic and Gap stores, with same-store sales down 8 percent year over year. Separately, a fire at a distribution center had the firm reconfiguring delivery and staff logistics.

Stores are being reconfigured, too, as Banana Republic will be exiting the U.K. in 2017, while the firm will still maintain an online presence there.

Gap said that overall it will shutter 65 stores, which is more than the 50 previously forecast.

The company said its expectation continues to be a bottom line of $1.87 to $1.92 a share for the whole year, which compares unfavorably with the $2.02 the Street had been estimating.