Gap shares tumble 13% as retailer cuts sales guidance after disappointing Old Navy performance

Sales at Gap 's largest brand Old Navy fell short of expectations during its fiscal first quarter, leading the retailer to cut its sales guidance on Thursday. During the quarter, Old Navy's comparable sales grew 1%, while analysts expected them to grow 3%, according to StreetAccount. As a result, Gap cut its sales outlook and is now expecting companywide sales to grow between 1% and 2%, down from a prior range of between 2% and 3%. While Gap cut its sales outlook for the year, its profitability is another story. The company raised its guidance and is now expecting adjusted earnings per share to be between $2.30 and $2.40, compared with a prior range of between $2.20 and $2.35. Gap's stock dropped more than 10% in extended trading following the results. In an interview with CNBC, CEO Richard Dickson attributed the sluggish sales to a spring and summer assortment that failed to land with shoppers – not a larger macroeconomic issue. "It's not a consumer issue," said Dickson. "We're winning with all income cohorts across low, middle, and high. When you have the right product at the right price value equation, customers are there, and our seasonal categories just got off to a weaker start." Dickson said sales of Old Navy's dresses and swimming shorts were particularly weak, while active, denim and kids categories were strong. …