Investing.com -- Shares in GAP inched down in after-hours trading following disappointing third-quarter results, the latest blow for a prominent retailer undergoing a major facelift amid significant brand identity concerns.
During Gap's third quarter, which ended on October 31, the company reported earnings of $248 million or 0.61 per share, down considerably from net profits of $351 million or 0.80 per share over the same quarter in 2014.
In June, Gap announced the closure of 175 stores from its namesake brand in a cost-cutting measure aimed at delivering more consistent and compelling product collection. Of the total, Gap expects to close 140 throughout North America by Jan. 30. Excluding the impact of the company's brand overhaul, Gap reported quarterly earnings per share of 0.63.
Within the report, Gap's namesake brand saw its revenues slide by 6.9% as its comparable store sales fell by 4% for the 13-week period. At Banana Republic, the sales climate appeared even grimmer, as comparative store sales plunged by 12% over the quarter. Last year, same-store sales at Banana Republic for the third quarter were flat on an annual basis. Old Navy, though, reported a 4% spike in same-store sales, up from 1% gains in the same category in the third quarter of 2014.
In total, Gap's revenue for the quarter fell nearly 3% to $3.86 billion. Gap's sales, however, were relatively flat when the negative impacts of foreign exchange translation were discounted. Gap estimated that the effects of a stronger dollar restrained sales for the quarter by approximately $100 million.
“With a challenging third quarter behind us, we are sharply focused on holiday execution across all channels,” said Art Peck, chief executive officer, Gap Inc (N:GPS). “We are driving forward on our key strategies designed to fuel future growth.”
Moving forward, Gap offered forward guidance of per share earnings of 2.38 to 2.42 for the entire year, down from previous estimates of 2.75 to 2.80.
“Gap has made clear progress on its transformation agenda and we look forward to introducing customers to the brand’s spring collection, which embodies elevated American style," Peck added.
Shares in Gap fell as much as 4% in after-hours trading before rebounding somewhat on Thursday evening. Gap shares traded at 24.90 on Thursday night, down 0.18 or 0.74% in after-hours.