By early afternoon, shares had dipped 2% to $38.50.
The apparel retailer said overall March same-store sales fell 6% year over year, a slight quarter-to-quarter increase from February's 7% drop.
By brand, Gap Global sales dropped 7%, Banana Republic fell 4%, and Old Navy Global dove 7%.
"While March performance has been challenging, we remain confident in the opportunities ahead," said CEO Glenn Murphy in a statement.
The company noted declining same-store sales were partially due to a later-than-usual Easter holiday this year compared to last (Easter falls in April in 2014, March in 2013).
"Given this shift in peak spring selling weeks, the company expected March to be negatively impacted," Gap said.
Management reaffirmed previous full-year earnings guidance of $2.90 to $2.95 per share.
TheStreet Ratings team rates GAP INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate GAP INC (GPS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, GAP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has slightly increased to $752.00 million or 5.76% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -9.26%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- GAP INC's earnings per share declined by 6.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GAP INC increased its bottom line by earning $2.75 versus $2.32 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $2.75).
- The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: GPS Ratings Report