2 Analysts Dissect The Gap's Same-Store Sales

Gap Inc GPS on Thursday reported its February net sales fell 1.2 percent from a year ago to $918 million, while same-store sales fell 4 percent.

In a report published Thursday evening, UBS analyst Roxanne Meyer commented on the company's results, noting sales were impacted by weather, lean inventories and a weaker comp at the Gap brand "shouldn't be a big surprise."

Meyer noted that the Easter shift to March will benefit March sales, the company did not quantify the impact although from a historical perspective, sales have been sensitive to calendar shifts, especially at Old Navy. However, the analyst added that any benefit Old Navy sees in March will be offset by light inventories stemming from the West Coast port issues.

Shares are Buy rated with a $48 price target as the Gap remains an "operational margin story" given a shift to higher-margin businesses and benefits from omni-channel and fabric platforming.

BMO: Surprised By The Magnitude

Janine Stichter of BMO Capital Markets also commented on Gap's February sales. The analyst was "surprised by the magnitude" of the weakness, which stands in contrast to the "solid" February results posted by L Brands Inc LB and Zumiez Inc. ZUMZ.

However, the analyst did note that weather negatively impacted sales, especially at Old Navy given its larger off-mall exposure.

"We expect trends to improve somewhat in March and April, given pent-up demand, although this may be partially hampered by light inventory levels resulting from the West Coast port disruptions," Stichter wrote. "Still, we expect the core Gap division to remain weak for the near term; with product already bought through fall, we do not expect any major changes to the merchandise, or the sales trend, until holiday at the earliest."

Shares remain Market Perform rated with a $35 price target.