Gap reports second-quarter profit down 19%
Apparel giant Gap Inc. had another lackluster quarter, reporting a 19% decline in profit and a slump in sales at stores open at least a year.
The San Francisco company -- parent to the Gap, Banana Republic and Old Navy chains -- said Thursday that its second-quarter profit fell to $189 million, or 35 cents a share, from $234 million, or 36 cents, in the year-earlier period.
Sales at stores open at least a year, known as same-store sales and considered an important measure of a retailer’s health, fell 2%.
Major divisions Gap North America, Banana Republic North America, Old Navy North America and International all posted the same or worse same-store sales results than in the second quarter of 2010.
Total sales rose 2% to $3.39 billion.
"Despite a difficult quarter, we still delivered a net sales improvement and I continue to believe we have far greater opportunities than challenges ahead of us," Chief Executive Glenn Murphy said. "Every brand, division and geography is focused on what matters most."
Christine Chen, a retail analyst at Needham & Co., said in a recent interview that although Gap brand has had some success in its pants lines, such as jeans and black pants, its tops aren't resonating with shoppers. Moreover, the company continues to have trouble convincing customers that its clothes and stores are trendy.
"That’s something they've really struggled with -- getting the coolness factor, the hipness factor, back," Chen said.
Gap released its earnings after the markets closed Thursday. During regular trading, its shares fell 90 cents, or 5.5%, to $15.52.
-- Andrea Chang
Photo: A Gap store in San Francisco. Credit: Reuters