Despite May's compulsive shopping, June marked the beginning of a decline for many retailers. While many have supposed in recent months that Gap
That category definitely includes Gap. In addition to its same-store sales slip (Wall Street had expected a 0.9% increase), overall sales fell 3% to $1.0 billion. The retailer also delivered a deep cut to its profit guidance, saying it now expects to earn $0.19 to $0.21 per share, as opposed to the previous expectation for $0.28 per share.
Granted, it looks as though July has proven difficult for many retailers. Ann Taylor
Seeing how specialty apparel retailers that appeal to a more mature female demographic -- such as Ann Taylor and Chico's -- have done well recently, I can see the power of the niche. These are slightly older women with solid pocketbooks and a desire to be fashionable, not trendy. So, with all the cutthroat competition for teens, it makes sense that Gap is trying to evolve from its past as a teenybopper retailer and appeal to a more general audience.
Several initiatives by Motley Fool Stock Advisor pick Gap point to an eagerness to expand the demographics for its self-titled stores as well as its Old Navy and Banana Republic storefronts. A hip new marketing campaign and a stepped-up plus-size line are meant to woo shoppers, some of which may have been disregarding Gap's portfolio of stores. At the moment, though, one might wonder whether Gap is succeeding.
On the other hand, maybe it's simply that so many shoppers shopped till they dropped in the springtime that they're all shopped out. Maybe that's compounded with the fact that high gas and food prices are eating into discretionary income, or people are worried about their credit card debt with interest rates threatening to rise. (Sound familiar? Our Credit Center can help.)
So, there are lots of reasons pocketbooks could be snapping shut right now, many completely circumstantial. However, such a surprising shortfall in sales numbers as well as drastically reduced profit guidance brings back a question Fool Rick Munarriz has asked before: Is Gap really back?
Tom Gardner likes Gap enough to pick it for Motley Fool Stock Advisor . Find out what other companies he has marked for success. Or, if you'd rather talk about Gap, check out our Gap discussion board.
Alyce Lomax does not own shares of any of the companies mentioned. When shopping, she definitely prefers Ann Taylor to Gap.
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