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Traders: How to play retail amid Gap drubbing

Gap shares skidded Monday after sales and earnings warnings, and "Fast Money" traders debated what the retailer's struggles meant for the whole sector.

The retailer said it had $3.44 billion in net sales for the first quarter, below both analysts' estimates and the figure reported in the prior-year period. Gap also said it expects diluted earnings per share of 31 to 32 cents for the period, well short of Wall Street's expectations of 44 cents.

The stock dropped more than 10 percent in after-hours trading. It has fallen about 45 percent in the last year.

"They've been struggling for a while. I don't think it means that all retailers should be thrown out with it," said trader Karen Finerman, who added she would stay away from Gap's stock.

Sale signs in the windows of a GAP store.
Scott Mlyn | CNBC
Sale signs in the windows of a GAP store.

Trader Pete Najarian called Gap a "value trap," as it continues to sag despite its low valuation.

Other traders said opportunity still exists in retail. Trader Steve Grasso called Target the "outperformer in the space," as it has climbed 10 percent this year.

While he likes TJX as a company, Najarian added that he would take profits in its stock after a strong run. TJX shares have risen 15 percent in the last year.

Disclosures:

Guy Adami

Guy Adami is long CELG, EXAS, GDX, INTC, Guy Adami's wife, Linda Snow, works at Merck.

Karen Finerman

Karen is long BAC, C, DRII, DRII calls, FB, FL, GOOG, GOOGL, JPM, LYV, KORS, M, MA, SEDG, SPY puts, URI. Her firm is long ANTM, AAPL, BAC, C, C calls, DRII, DRII calls, FB, GOOG, GOOGL, JPM, JPM calls, KORS, LYV, M, MOH, PLCE, SPY puts, URI, her firm is short IWM, MDY. Karen Finerman is on the board of GrafTech International.

Steve Grasso

Steve is Long AAPL, BA, BAC, CC, DD, DIS, DECK, EVGN, KBH, MJNA, MU, OLN, PFE, PHM, T, TWTR, GDX kids own EFA, EFG, EWJ, IJR, SPY

Pete Najarian

Long AAPL, BAC, BMY, CSCO, DIS, DISCA, GE, KMI, KMI.A, KO, LUX, MRK, PEP, PFE, SAVE, VIAB, ZIOP Long Calls: AAL, AGN, AKS, AMJ, COP, EGO, EWZ, HAIN, HBAN, JD, KATE, KBH, KMI, LLY, MSFT, MT, NLNK, NOK, SLV, SPG, TCK, UAL, YHOO Long Puts: FCX, NOV, PBR, VLO