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The Gap Inc. (GPS) reported a decrease of 3% in same-store sales for the four-week period ended February 26, 2011. Results substantially lagged 4% growth in February 2010.

The decline in same-store sales stemmed from International reporting a 7% decrease and Banana Republic North America reporting a 4% fall. Gap North America suffered a 1% slip and Old Navy North America another 4% dip.

The company reported net sales of $821 million in February 2011, compared with $838 million in the year-ago period.

Guidance

Moving forward, Gap expects earnings of $1.88 to $1.93 per share for fiscal 2011. The company is apprehensive of a likely fall in 2011 operating margin owing to cost inflation.

In fiscal 2011, the company plans to open approximately 190 new stores, mostly in international locations. The company also expects to close approximately 125 stores.

Peer Comparables

Gap competes with The TJX Companies Inc. (TJX) among others. The latter reported February same-store sales growth of 3.0% that moderated from a 10% increase in the year-ago period.

Based in San Francisco, California, The Gap Inc. is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products for men, women, children and babies. Its flagship brands include Gap, Banana Republic, Old Navy, Piperlime and Athleta.

We maintain our long-term Neutral reccommendation on Gap. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

Source: Fall in Gap Comps