Old Navy does the heavy lifting for Gap in Q2

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Old Navy does the heavy lifting for Gap in Q2

By Marianne Wilson - 08/23/2018
Gap Inc. reported second quarter sales and earnings that beat the Street, but its namesake division didn’t benefit from the overall positive retail climate.

Net sales rose 8% to $4.1 billion in the period ended August 5, better than the $4 billion analysts had expected.

Same-store sales increased 2%, marking the company’s seventh-consecutive quarter of positive comp growth. By brand, same-store sales rose 5% at Old Navy and 2% at Banana Republic. Same-store sales fell 5% at Gap, almost double what analysts had expected.

“In our opinion, management needs to press Gap's reset button,” said Neil Saunders, managing director, GlobalData Retail. “The brand is adrift and needs a much clearer identity and sense of purpose. This is now an urgent requirement as a lot of other apparel brands - like J Crew, American Eagle, and Abercrombie & Fitch - are all upping their game and producing more consumer-centric collections.” (Click here for more analysis.)

Net income rose to $297 million, or 78 cents per share, compared with $271 million, or 66 cents a share in the year-ago period. Analysts had expected earnings of 71 cents a share.

“We delivered our seventh consecutive quarter of positive comparable sales growth, led by the strength of Old Navy,” said Art Peck, president and CEO, Gap Inc. “Our balanced growth strategy supports continued growth and improved profitability, and our investments are focused on leveraging the advantages of our scaled operating platform and accelerating the impact of our significant data assets.”

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