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Earnings Roundup: Sales at Gap, Michael Kors, New Look Sink and Strengthen

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Gap

Retailers in the U.S. and Europe fought tough times in year-ending quarters, and some fared better than others.

Gap

After a series of declines, Gap’s fourth quarter net sales crept up 1 percent to $4.43 billion after a 7 percent drop in the prior year period.

Comparable sales at the company’s namesake Gap brand were flat, an improvement from last year’s 3 percent decline. News was more positive for Old Navy, which saw a 5 percent increase in sales compared to an 8 percent decline the year in fiscal 2015. Banana Republic’s sales were slightly less bad, sliding 3 percent compared to the previous year’s 14 percent fall.

“Against a challenging retail backdrop, we’re pleased to report growth in our top-line and comp sales during the critical holiday quarter,” Gap Inc. CEO Art Peck said. “We remain focused on actions that will strengthen our brands and recapture market share.”

The company will release its full fourth quarter earnings on Feb. 23.

Michael Kors

Michael Kors had a better end to 2016. For the third quarter ended Dec. 31, the luxury brand’s net sales increased 9.2 percent to $836.7 million, largely owed to 193 new store openings since the previous year’s third quarter.

Revenue, however, slid 3.2 percent to $1.35 billion. Revenue from the Americas fell 7.4 percent and Europe was down 7 percent. Asia revenues, on the other hand, swelled 89.1 percent thanks to the company acquiring previously licensed operations in Greater China and South Korea.

Michael Kors chairman and CEO John D. Idol said he expects the company’s continued expansion in Asia will represent a $1 billion opportunity over the long-term, though he was less pleased about Kors’ performance in the West.

“Overall, we were disappointed with our North American and European comparable store sales performance during the quarter,” Idol said. “We believe that headwinds in these markets will continue throughout the spring season as we face reduced traffic trends in shopping malls, currency fluctuation, uncertainty surrounding certain political changes in European countries and the implementation of our reduced promotional cadence in North America.”

New Look

Over in Europe, multichannel retail brand New Look had highs and lows in its third quarter results for the period ended Dec. 24.

Revenue just crossed the threshold into positive territory, increasing 0.8 percent to 422.6 million pounds ($529.1 million). Profits before tax, however, fell 37.6 percent to 30.1 million pounds ($37.7 million). Group sales fell 4.6 percent in the quarter, while third-party e-commerce sales swelled 73 percent.

“The U.K. market has continued to be extremely challenging, with reduced footfall and a highly promotional environment on the high street, resulting in a disappointing like-for-like sales performance. Despite this, total sales for the quarter were level as a result of good performances outside the U.K., online and in Menswear, proving that our strategy of diversification is the right one for our business,” CEO Anders Kristiansen said. “We are clear on the actions needed to capture spend, but these will take time to implement. While we expect 2017 to be tough and are setting our plans accordingly, we strongly believe in our ability to continue to execute our strategy.”

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