NEW YORK (TheStreet) --Gap (GPS) reported 2016 third quarter financial results beating on the top line and matching on the bottom line. After the market close on Thursday, the San Francisco-based clothing and accessories retailer reported earnings of 60 cents per share, matching analysts' expectations.
Revenue decreased 2% year-over-year to $3.8 billion, however, topped expectations of $3.74 billion.
Despite its roughly in-line results, Gap saw its seventh straight quarter of declining sales and expects to close more stores than previously forecast. Consequently, shares of Gap are declining over 7% on Friday morning.
"I think Gap has its work cut out for it. Old Navy is going to keep humming, but in the meantime Gap and the Banana Republic are laggards. There's just no evidence that a turn is imminent," MKM Partners managing director Roxanne Meyer said on CNBC's "Squawk Box" this morning.
Meyer has a "neutral" rating and a $28 price target on Gap's stock.
"On one hand, this is a company that has been winning in the past few years through share buybacks and expense reductions. This is the first quarter the company signaled they are going to be investing again,' Meyer noted.
The investing, Gap hopes, will drive more foot traffic to stores and bring new customers to the brand.
However, by investing again Gap puts pressure on its expense structure and in its ability to consistently deliver on the top line, she explained.
"I think that top line is going to remain challenging. There's no evidence that we are set up for a rebound, other than the compares are just so easy and the margin situation is very attractive," Meyer said.