Gap shares fall on sales disappointment at namesake shops

Gap was among the worst performing stocks on the US benchmark after the retailer behind brands including Old Navy and Banana Republic reported a larger than expected decline in same-store sales at its eponymous brand.

The retailer reported a 7 per cent decline in global same-store sales in March, a key industry metric that compares sales at stores that have been open for at least a year, at its namesake brand. This was worse than Wall Street's forecasts for a 3.5 per cent fall.

Sales at Banana Republic fell 3 per cent, worse than expectations for a 0.4 per cent gain.

The declines were offset by a 14 per cent gain in comparable sales at Old Navy that eclipsed analysts' estimates. This helped overall Gap sales rise 2 per cent, ahead of expectations for a 0.5 per cent gain.

While overall comparable sales beat forecasts, they disappointed investors as they were not "positive enough" despite the earlier timing of the Easter holiday shopping period.

"With the reversal of the Easter shift likely to weigh on April and fundamentals at the Gap brand remaining challenged, we remain fairly cautious on this stock," Ike Boruchow, an analyst at Sterne Agee, said.

The company installed insider Art Peck at the helm earlier this year in an effort to revive sales.

Gap shares, which have climbed 5 per cent in the past year, declined nearly 4 per cent to $41.16.

Netflix shares climbed after the online streaming service behind shows like Unbreakable Kimmy Schmidt, Daredevil and House of Cards, was upgraded by analysts at Citi.

Analysts raised their rating of the stock to "buy" from "neutral" and increased their price target from $409 to $525, saying the recent decline in share price was probably "due to competition concerns that we don't share, provides an opportunity for long-term bulls" and that international markets offer a significant opportunity.

Mr May is bullish that the company can grow its paying streaming subscribers from 57m in two or three countries now, to 130m by 2020 from more than a dozen countries.

"The content line-up is improved in 2015 and recently released content is getting good reviews, both of which bode well for subscriber growth," Mark May, an analyst at Citi said.

Shares in Netflix climbed 2.5 per cent to $451.00.

General Electric shares climbed 8 per cent to $27.78 after the Fairfield, Connecticut-based company unveiled plans to sell the majority of GE Capital, its finance business, over the next two years and to focus on its manufacturing business.

GE announced the sale of nearly all of its GE Capital property assets to funds managed by Blackstone and to Wells Fargo, for about $26.5bn. The company also said it expects 90 per cent of its earnings to be generated by its industrial business in 2018, up from 58 per cent last year.

Industrials were the best performing sector on the benchmark index driven by the rally in shares of General Electric.

The S&P 500 gained 0.4 per cent to 2,098.44, the Dow Jones Industrial Average climbed 0.3 per cent to 18,015.08. The Nasdaq Composite rose 0.2 per cent to 4,984.75.

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