Gap Inc. (GPS) reported comparable-store sales (comps) increase of 7% for the 5 weeks ended Jul 6, 2013 compared with flat comps results registered for the 5 weeks ended Jul 7, 2012, driven by strong performances at its namesake Gap and Old Navy stores. Moreover, net sales totaled $1.53 billion for the 5 weeks ended Jul 6, 2013, up 8% from sales worth $1.41 billion for the 5 weeks ended Jun 30, 2012.
The difference in the year-ago period comparisons for comps and net sales is primarily due to the inclusion of an additional week in fiscal 2012.
Global brand-wise, comps performances at Gap Global were up 5% compared with a 3% fall in the prior-year period, while comps at Old Navy were up 13% compared with a 1% increase recorded in Jun 2012. However, comps at the company's Banana Republic stores registered a fall of 1% versus an increase of 4% in June last year.
The improvement in comps and sales for June mainly resulted from favorable customer response to the company's clearance of summer assortments to make room for back-to-school merchandise.
Gap, which witnessed a phase of declining comparable-store sales and reduced profitability, is gradually returning to growth based on turnaround strategies as is evident from its solid comps and sales performances in fiscal 2013 so far.
Furthermore, in early June, Gap announced its plans for further global expansion with the opening of franchise and standalone stores in Paraguay, Hungary and Mexico. Apart from this, the company intends to extend its international operations to 8 Latin American countries, namely, Chile, Panama, Colombia, Mexico, Uruguay, Paraguay, Peru and Brazil.
Gap has been progressing well with its long-term plans by reducing dependency on the North American specialty business, while increasing its online presence and expanding international operations. Gap aims to generate 30% of its total sales from overseas operations and online business in 2013 versus 27% in fiscal 2012.
Apart from G! ap, other retailers that came out with comparable-store sales data include, Zumiez Inc. (ZUMZ),Costco Wholesale Corp. (COST) and Stein Mart Inc. (SMRT), which reported an increase of 1%, 6% and 6.5%, respectively, for the month of June.
Gap currently carries a Zacks Rank #3 (Hold) and is scheduled to release its July sales results on Aug 8, 2013.