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Gap reports earnings in line with Street expectations, announces 75 store closings

As part of a restructuring, clothing retailer Gap will close its fleet of 53 Old Navy stores in Japan. All told, the company is shuttering 75 stores in an effort to save $275 million annually.

Gap shares quickly jumped 5.5 percent on the news before giving back some of the gains. The stock was last up about more than 3 percent in after-hours trading.

The retailer posted adjusted fiscal first-quarter earnings of 32 cents on revenue of $3.44 billion. Analysts had expected earnings of 32 cents a share on sales of $3.51 billion, according to a consensus estimate from Thomson Reuters. Earnings were down from 56 cents a share a year earlier and revenue fell from $3.66 billion.

Gap said it saw its comparable-store sales decline 5 percent during the quarter. To reposition itself for long-term growth, the company said it will "focus on geographies with the greatest potential" and "streamline its operating model."

As part of this restructuring, Old Navy will close stores in Japan and focus on growth in North America and China. The brand saw a 6 percent global same-store sales decline in the quarter. Gap emphasized that Japan remains an important market for the company's portfolio and that 200 Gap and Banana Republic stores will remain in the country.

The retailer also said it would be shut some Banana Republic locations, bringing the total expected store closure count to 75 by the end of fiscal 2016. For the first quarter, Banana Republic global saw an 11 percent decline in comparable-store sales.

"By taking every opportunity to exploit our strategic advantages, our brands will be able to more fully harness the power of the enterprise to better serve their customers across channels and geographies," Art Peck, CEO of Gap, said in a statement.

Gap also said that it will not reaffirm its earnings outlook for the current fiscal year, but noted that the current "First Call consensus earnings per share estimate of $1.92 falls within a reasonable range of potential outcomes, excluding restructuring impacts from its store closure and streamlining measures."

The company, however, added that "trends in the apparel retail environment would need to improve from the first quarter of fiscal year 2016 in order to achieve this estimate."