Apparel conglomerate Gap Inc has reported net earnings for the second quarter which ended July 29th 2006 of $128 million compared with $272 million for the same period last year.
Second quarter net sales were $3.7 billion, compared with $3.7 billion for the same period last year. Comparable store sales decreased 5 percent, compared with a prior year decrease of 3 percent.
“The second quarter continued to be challenging, as we aggressively cleared inventory to prepare for fall merchandise, and we invested in marketing and stores to improve second half performance,” said Gap Inc, President and CEO Paul Pressler.
“Each brand is at a different stage in its turnaround,” continued Pressler. “We are encouraged by improved performance at Banana Republic and our online division. And while we are making progress at Gap and Old Navy, we know it will take several seasons of consistent product, marketing, and store improvements to win back our customers. We remain committed to the strategies at each of our brands and to our growth initiatives.”
The company had expected fiscal year earnings per share of $1.23 to $1.27. This previous guidance was predicated on the belief that the company's efforts to improve performance would begin to gain traction during the second quarter and build momentum with the fall product flows.
Gap Inc's overall performance month-to-date is below the company's expectations, driven by Gap and Old Navy. Due to the disappointing second quarter results coupled with month-to-date results, the company is revising its guidance for fiscal year earnings per share to $1.08 to $1.12.
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