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Gap's Shares Plummet on Disappointing August Sales

August 31, 2000|From Times Staff and Wire Reports

Shares of clothing retailer Gap Inc. hit a two-year low Wednesday after the company reported a 14% August sales decline in stores open at least a year--worse than the 4% to 7% that analysts had anticipated.

The parent company of Gap, Banana Republic and Old Navy said "uncertainties" in the market and, in particular, weakness at Old Navy, also pose "risks and challenges" to earnings for the rest of the year.

In after-hours trading, Gap shares tumbled $4.63 to $22.13 on the New York Stock Exchange, their lowest since 1998.

Gap reported sales of $1.09 billion for the four weeks ended Aug. 26, up 6% over the comparable period last year.

For the 30 weeks ended Aug. 26, same-store sales decreased 4%, while overall sales rose 18% to $6.8 billion.

On Aug. 3, Gap warned that weak sales could hurt second-quarter earnings, which sent its shares down sharply, shaving about $7 billion from the company's market value.

Gap stock then fell an additional 14% on Aug. 11 after the company posted a 6% drop in earnings.

Meantime, Victoria's Secret parent Intimate Brands Inc., which is majority owned by Limited Inc., said that sales in stores open at least a year increased 3% in August.

Total sales were $305.4 million, the company said, up 11% from the $274.4 million for the same month last year.

Intimate Brands shares fell 50 cents on Wednesday to close at $17 on the NYSE.

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