Gap May same-store sales worse than expected

CHICAGO (Reuters) - Apparel chain Gap Inc. (GPS.N) reported a greater-than-expected 14 percent decline in May same-store-sales on Thursday, hurt by weakness in all its units.

Analysts, on average, had been expecting the San Francisco-based clothing retailer to post a same-stores sales decrease of 9.5 percent, according to Thomson Reuters data.

Gap, which runs Banana Republic, Old Navy, and its namesake Gap stores, said total sales for the four weeks ended May 31 fell 8 percent from the same period last year to $1.09 billion.

However, the company said merchandise margins in May were significantly above those a year earlier.

The global retailer is trying to turn around as it improves its merchandise, cuts costs, and plans inventories conservatively. Last month, it said first-quarter net profit jumped 40 percent.

But sales were also weak in that quarter, with sales at stores open at least a year, or same-store sales, falling 11 percent.

Fashions at the lower-cost Old Navy chain have been too youth-focused, hurting sales, and the company is striving to correct its merchandise to include more basics.

But Gap said it did not expect to see improvements in the merchandise assortment at Old Navy until the fall.

(Reporting by Brad Dorfman, editing by Dave Zimmerman)