Gap 2Q Profit Plunges

New York City, The prospects for a quick turnaround at Gap Inc. diminished Thursday after the retailer reported more than a 50% drop in second-quarter profit and cut its earnings forecast for the year.

Gap Inc. reported its net income for the quarter ended July 29 dropped to $128 million from $272 million for the same period last year. Sales were flat at $3.72 billion, while comp-store sales fell 5%, compared with a prior-year decrease of 3%. Gap cited sluggish sales and "aggressive" discounting.

“The second quarter was more challenging than we expected,” Paul Pressler, CEO and president, Gap Inc., said in an address to investors during a conference call Thursday. “While we are encouraged by improved performance at Banana Republic, business was tough at Gap and Old Navy as we cleared through summer product. But across all businesses, I believe we are making progress." Comp-store sales at Gap stores fell 6% in the second quarter, while comp-stores sales at Old Navy slumped 5% and comp-store sales at Banana Republic slipped 1%.