Gap Inc. reported its seventh straight quarter of sales declines Thursday, which sent shares (GPS) spiraling down more than 12 percent the following morning. The San Francisco-based company’s net sales decreased 2 percent to $3.8 billion in the third quarter ended Oct. 29, compared with $3.86 billion last year. Profits fell to $204 million or 51 cents per share, versus $248 million or 61 cents per share.
On a comparable sales basis, Gap and Banana Republic were down 8 percent apiece in Q3 and while Old Navy gained 3 percent, it was less than the 4 percent increase achieved a year ago. Overall, the company’s comps were down 3 percent, which included an estimated negative impact from the Fishkill distribution center fire in August of roughly 2 percent. Gap ended the quarter with 3,742 stores in 50 countries after closing 41 locations, mainly in Asia, and expects net closures of about 65 company-operated stores in fiscal year 2016.
Abercrombie & Fitch had many problems in the third quarter: weak traffic in flagship and tourist locations; chain store traffic continued its downward trajectory; and seasonal categories underperformed. All of this combined to send net sales down 6 percent to $821.7 million from $878.6 million a year ago. Same-store sales also declined 6 percent, versus a 1 percent drop last year.
By brand, net sales decreased 13 percent to $358.3 million for Abercrombie and by 1 percent to $463.5 million for Hollister, as sales suffered in the U.S. and internationally. Net income plunged from $41.9 million or 60 cents per diluted share to $7.88 million or 12 cents per diluted share. And the outlook isn’t good: the company expects Q4 comps to be down 3.2% year-over-year. Shares (ANF) plummeted more than 14 percent before noon on Friday.