Gap cuts full-year sales outlook after Old Navy misses estimates

Gap reported mixed fiscal first-quarter results, missing revenue estimates but beating adjusted earnings expectations. Comparable sales at its largest brand, Old Navy, grew 1 percent, below the 3 percent increase analysts had projected. The company lowered its full-year sales growth forecast to a range of 1 percent to 2 percent from the prior range of 2 percent to 3 percent.

Gap now expects adjusted earnings per share between $2.30 and $2.40, up from the earlier range of $2.20 to $2.35.

Quarterly results Revenue reached $3.50 billion, slightly below the $3.52 billion analysts expected and up from $3.46 billion a year earlier. Reported net income was $339 million, or 90 cents per share, compared with $193 million, or 51 cents per share, in the prior-year period.

Adjusted earnings per share came in at 38 cents, above the 37 cents analysts had forecast. The company attributed the higher profit outlook to tax-rate favorability and interest income.

Brand performance Comparable sales at the Gap namesake brand rose 10 percent, exceeding the 5.5 percent growth analysts expected. Sales at that banner totaled $796 million, also up 10 percent. Old Navy posted weaker results in dresses and swimwear, while activewear, denim, and children's categories performed better.

The company said it is adjusting price points and marketing to improve sales trends. Gap shares fell more than 14 percent in extended trading after the results were released.