Specifically, the company's The Gap and Banana Republic brands "continue to disappoint," analysts said.
On Thursday the company reported August sales results. For the month, the company's same store sales declined 3% year-over-year, hurt by the later Labor Day weekend.
However, its Old Navy brand showed improvement as August same store sales increased 2% year-over-year.
Shares closed Thursday's trading session up 1.13% to $33.01.
Based in San Francisco, The Gap operates as an apparel retail company worldwide. It offers apparel, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Athleta, and Intermix brand names.
Separately, TheStreet Ratings team rates GAP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate GAP INC (GPS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and expanding profit margins. We feel its 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 current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels.
- 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. When compared to other companies in the Specialty Retail industry and the overall market, GAP INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- 37.40% is the gross profit margin for GAP INC which we consider to be strong. Regardless of GPS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.61% trails the industry average.
- GPS, with its decline in revenue, underperformed when compared the industry average of 10.6%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: GPS Ratings Report