California Apparel News

Gap Inc. is working on how to streamline its retail chain operating model after the San Francisco company showed a major drop in same-store sales in April and for the first quarter of 2016.

The retailer is taking a look at its Banana Republic and Old Navy fleets outside of North America to sharpen its focus on geographies with the greatest potential.

“Our industry is evolving and we must transform at a faster pace while focusing our energy on what matters most to our customers,” said Art Peck, Gap Inc.’s chief executive officer. “We are committed to better positioning the business to recapture market share in North America and to capitalize on strategic international regions where there is a strong runway for growth.”

In April, same-store sales for the company as a whole were down 7 percent versus a 12 percent decrease last year, Gap Inc. reported on May 9.

The most affected was the Old Navy chain, which sells bargain-basement items. Its same-store sales were off by 10 percent compared to a negative 6 percent last year.

Banana Republic’s comparable-store sales dipped 7 percent compared to a negative 15 percent last year, and Gap stores saw their same-store sales decline by 4 percent versus a 15 percent drop last year.

For April, net sales for the four-week period ending April 30, 2016, were $1.12 billion compared with net sales of $1.21 billion for the four-week period ending May 2, 2015.

And for the first quarter of fiscal 2016, Gap Inc.’s net sales were $3.44 billion compared with $3.66 billion for the same period last year.

The company said gross margins were affected by the company entering April with more inventory than was planned because of weaker than expected traffic, which began in late March and continued into April.

Looking to May, Gap Inc. said that the Sunday and Monday of the Memorial Day holiday falls in the fiscal month of June this year versus May last year and is expected to negatively impact May sales and benefit June sales.