Gap warns it will miss profit targets after sales fall

Clothing chain Gap says it needs to move faster to keep up with rivals. The company reported its fifth quarterly sales fall and warned profits would miss targets.

Sales across the group, which includes Banana Republic and Old Navy, fell 5%.

It now expects earnings of 31 to 32 cents a share, below Wall Street expectations of 44 cents a share.

Gap boss Art Peck, who took the job last year, said the firm must take action to "transform at a faster pace".

He said the group also planned to evaluate the Banana Republic and Old Navy shops it had outside North America, with the intention of "sharpening its focus on geographies with the greatest potential".

For the quarter, the company said by brand like-for-like sales fell 3% at Gap, 11% at Banana Republic and 6% at Old Navy.

Total sales for the quarter fell to $3.44bn from $3.66bn.

'Disastrous'

Mr Peck had promised that spring would prove the turning point for the firm, which has struggled to compete with High Street rivals such as H&M and Zara.

But the firm said the weaker-than-expected store traffic, which began in March had continued into April.

Neil Saunders, chief executive of research firm Conlumino, said: "This has been a disastrous quarter for Gap and one during which all of its main engines stalled and went into reverse,"

Gap shares, which have already fallen almost 45% over the past year, dropped over 12% in after-hours trading.

The firm said it would give more details of its plans to improve sales at its 19 May earnings announcement.