NEW YORK (
) - You know things are bad in retail when
(GPS - Get Report)
, the bright star in recent months in the apparel industry, reported disappointing September sales.
Gap said late Thursday after the market closed September 2013 net sales of $1.46 billion were flat compared with last year.
Gap's comparable sales for last month fell 3% compared with a 6% increase for the same period in 2012, well below analysts' expectations of a 1.6% gain, according to
By brand, the numbers were equally disheartening. All three brands saw comparable sales fall last month, with the sharpest decline at Banana Republic. The brand saw a 5% decrease compared with 4% month over month growth in 2012. Gap's flagship brand fell 3% compared with positive3% growth last year. Old Navy fell 2% compared with 10% growth last year.
Shares slumped 7.2% to $36.65 in early Friday trading, the lowest the stock's been since April, following the news.
"While September proved to be somewhat challenging, we remain steadfast in our commitment to deliver on our full-year goals," Chairman and CEO Glenn Murphy said in a statement.
The company attributed lower sales to decelerating mall traffic, especially in the last week of September as "economic uncertainties" increased over the government shutdown, according to a pre-recorded phone call.
At its flagship brand, Gap pushed its fall sale forward into October compared to September of last year, which further hurt this year's comps, but will be a benefit to this month's sales.
"Comps in September were below our estimate and consensus as all divisions comped negatively during the month. We believe this is attributable to the current economic uncertainty, the absence of a strong fashion trend (last [year] it was all about brights), and the consumer's shift to buying durables that has led to decreased traffic and lower spending on apparel. However, we believe the assortments at both Gap and Old Navy are trend-right for fall," Stifel analyst Richard Jaffe wrote in a research note. He has a "buy" rating on the stock.