Gap Profit Down, Outlook Weak; Shares Down 5%

(RTTNews) - Apparel retailer Gap Inc. (GPS), on Thursday reported a decline in profit for the third quarter, hurt largely by continued weak sales at its namesake brand and Banana Republic. Earnings for the quarter came in line with Wall Street estimates, while revenues trumped expectations. Shares of Gap slipped a near five percent on its weak outlook.

San Francisco-based Gap's third-quarter profit dropped to $204 million or $0.51 per share from $248 million or $0.61 per share last year.

Gap's adjusted earnings for the quarter were $0.60 per share. Analysts polled by Thomson Reuters had a consensus earnings estimate of $0.60 per share for the quarter.

Sales for the quarter dropped 2 percent to $3.80 billion from $3.86 billion last year. Analysts had expected revenues of $3.74 billion for the quarter.

Gap's comparable sales for the quarter declined 3percent, as same-store sales at Gap and Banana Republic slumped 8 percent, while, Old Navy reported a 3 percent increase in same-store sales.

CEO Art Peck said, "I'm pleased to see improved product across our brands, as well as areas of healthier merchandise margins, even against the backdrop of challenging traffic trends during the quarter."

Looking forward to full year 2016, Gap continues to expects adjusted earnings of $1.87 to $1.92 per share. Analysts currently estimate earnings of $2.02 per share.

GPS closed Thursday's trading at $30.71, up $0.28 or 0.92% on the NYSE. The stock, however, dropped $1.51 or 4.92% in the after-hours trade.