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Goldman Weighs In After Gap, Old Navy And Banana Republic All Miss Estimates

Goldman Sachs trimmed its estimates and price target on Gap Inc GPS 11.51% after the apparel retailer's April comps missed Street view and guided first quarter earnings below consensus.

The company's consolidated April comparable store sales fell 7 percent, missing consensus estimate of -1 percent.

All three brands missed expectations: Gap comped -4 percent (consensus +1 percent), Banana Republic comped -7 percent (consensus -6 percent), and Old Navy comped -10 percent (consensus 0 percent).

The company also provided first quarter EPS guidance of $0.31-$0.32 versus consensus $0.43, and reiterated that increased markdowns would hurt gross margins.

"Throughout FY15, the company had called out spring 2016 as a key turning point for the brand, but comps deteriorated sequentially on a 2-year basis throughout the quarter," analyst Lindsay Drucker Mann wrote in a note.

The analyst, who has a Neutral rating on the stock, cut FY16/17 EPS estimate to $2.14/$2.24 from $2.20/$2.36 based on weaker sales and gross margin, offset by expense savings. Street expects earnings of $2.17 a share for 2016 and $2.34 a share for 2017.

The analyst also trimmed the price target on the stock to $22 from $24.

Shares of Gap fell 11.51 percent to $19.30. The stock touched a new 52-week low of $18.98 following disappointing sales results from the retailer.

DateFirmActionFromTo
May 2016Topeka CapitalDowngradesBuyHold
Apr 2016Deutsche BankInitiates Coverage onSell
Apr 2016CitigroupMaintainsNeutral

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