Gap’s first quarter profit has fallen below expectations. The quarter presented challenges like operating issues and the unseasonably cold and snowy weather. The brand has struggled to keep pace with fast-fashion rivals such as H&M and Forever 21 and tackle the dominance of Amazon.

Though the company has pushed hard to bring styles to stores faster like fast fashion chains, the company has failed to capture the imagination of shoppers like it had done a decade ago. Besides Gap, the company also owns Old Navy and Banana Republic. Sales at Gap branded stores open for at least a year sank four per cent.

Even its strong performing Old Navy business posted a lower-than-expected three per cent rise in same-store sales, missing estimates for the first time in four quarters. Inventories in the quarter rose 3.7 per cent from a year earlier, mainly due to Gap merchandise stuck on shelves and in warehouses.

Gross margins dropped 120 basis points, excluding new accounting rules, in the quarter. The company, however, expects pressure on margins to ease in the current quarter. Overall same-store sales rose one per cent in the three months ended May 5, while analysts were expecting a 1.67 per cent increase.