Weak Demand for Banana Republic, Old Navy Weighs on Gap

Apparel retailer Gap Inc (NYSE:GPS) reported lower-than-expected quarterly sales at established stores, hurt by weak demand for its Banana Republic and Old Navy brands.

The San Francisco-based retailer's shares fell about 10 percent in extended trading on Monday.

Gap has struggled in the past few quarters after a series of fashion misses amid increasing competition from online and fast fashion retailers such as H&M <HMb.ST>, Forever 21 and Inditex's <ITX.MC> Zara.

"The company is identifying opportunities to streamline its operating model to be more efficient and flexible," Gap said in a statement.

The company estimated a profit of 31-32 cents per share for the first-quarter. Analysts' on average had expected 44 cents, according to Thomson Reuters I/B/E/S.

Comparable sales at Banana Republic stores fell 11 percent - the fifth straight quarterly decline - as the brand continued to struggle to attract shoppers.

Sales at Old Navy, a bright spot in recent years, fell 6 percent. Sales at the namesake Gapbrand fell 3 percent.

Overall sales at established stores fell 5 percent in the quarter. Analysts on average had expected a decline of 2.6 percent, according to research firm Consensus Metrix.

Net sales fell 6 percent to $3.44 billion, missing the average analyst estimate of $3.54 billion.

The company is scheduled to report first-quarter earnings on after the bell on May 19.

(Reporting by Subrat Patnaik in Bengaluru; Editing by Saumyadeb Chakrabarty)