Gap Inc. rebound continues with strong quarter as income nearly doubles
Gap, Inc. maintained momentum during during its second quarter with better-than-expected earnings and revenue, led by another strong performance at Old Navy.
The apparel giant affirmed its full-year sales outlook of up slightly from the previous year. It also raised its operating income guidance to approximately 50% growth, up from percentage growth in the mid-40s.
The earnings report comes approximately one year after former Mattel executive Richard Dickson took the reins as CEO.
“Gap Inc. delivered another successful quarter, exceeding financial expectations and gaining market share for the sixth consecutive quarter,” stated Dickson. “In comparison to where we were only one year ago, we are in a stronger position across key metrics that matter — including net sales, margins, and our cash position — and we are making consistent progress in the reinvigoration of our brands."
Gap posted net income of $206 million, or $0.54 per share, for the quarter ending Aug. 3, up from $117 million, or $0.32 per share, in the year-ago period. Analysts had expected earnings per share of $0.41.
Sales rose 5% to $3.7 billion, above estimates for $3.63 billion. Comparable sales increased 3%, with the strongest increase — 5% — at the Old Navy brand.
“These results are a reflection of the dedication and collaboration of our global team, reinforcing my confidence that we are well on our way to unlocking the full potential of this extraordinary portfolio of iconic American brands,” said Dickson.
Here are Gap's results by brand.
Old Navy:
•Sales rose 8% to $2.1 billion, with comparable sales up 5%. It was the fourth consecutive quarter of positive comparable sales at the brand as its continued focus on operational rigor is driving improved consistency in performance, according to the company.
Gap:
•Sales rose 1% to $766 million. Comparable sales rose 3%, representing the third consecutive quarter of positive comps at the brand. Gap's reinvigoration efforts have helped drive market share gains at the brand for the past five quarters, the company said.
Banana Republic:
•At $479 million, sales were were flat compared to last year. Comparable sales were also flat.
“The brand continues to focus on fixing the fundamentals and is actively working to improve its pricing and assortment architecture,” the company said.
Athleta:
•Sales fell 1% $338 million were down 1% compared to last year. Comparable sales were down 4%. Gap expects Athleta to return to positive comparable sales growth for the remainder of the year.
Gap ended the quarter with a total of 3,568 stores globally, including 1,248 for Old Navy North America, 460 for Gap North America, 393 for Banana Republic North America and 271 Athleta North America.
