Shares of Gap Inc. (GPS), the parent of Gap, Banana Republic and Old Navy apparel stores, fell in morning trading after the retailer reported weaker than expected July and second quarter same-store sales.

JULY: For the four weeks ended July 30, Gap said total company same-store sales declined 4% vs. a 3% decrease in the prior year prior. Gap said comparable sales fell 14% at Banana Republic and declined 4% at the Gap Global brand, while Old Navy SSS were flat. Total sales for the month were $1.1B, slightly below last year's $1.12B.

SECOND QUARTER: Gap said its comparable sales fell 2% during the second quarter, in line with the year-ago period, and Banana Republic SSS fell 9%, Gap Global SSS were down 3% and Old Navy SSS were flat with the prior year. Preliminary net sales for the quarter were $3.85B, above analysts' current estimates of $3.78B. Looking ahead, Gap expects adjusted earnings per share of 58c-59c, above analysts' estimates of 53c. The adjusted forecast excludes the negative impact associated with its previously announced store closure and streamlining measures of approximately 28c. "While performance varied during the quarter, we made progress on our streamlining initiatives and continued to see signs of improvement in our larger brands," Chief Financial Officer Sabrina Simmons said.

ANALYST REACTION: This morning, Mizuho upgraded Gap to Neutral from Underperform.

WHAT'S NOTABLE: Mall-based retailers, including Gap, have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21 and H&M, as well as an increase in online shopping. On May 9, Gap said it would take steps to better position the company for improved business performance and that it was identifying opportunities to streamline its operating model to be "more efficient and flexible." In June, Gap reported its first comp sales increase since March 2015.

PRICE ACTION: Gap was down about 6.5% to $23.97 in early trading.

OTHERS TO WATCH: Other retailers trading lower this morning include Nordstrom (JWN), American Eagle Outfitters (AEO), Urban Outfitters (URBN) and Buckle (BKE).