Gap Inc. reports 7% drop in comp-sales

SAN FRANCISCO Gap Inc. today reported net sales of $1.054 billion for the four-week period ended Aug. 4, which is an increase of 1% compared to net sales of $1.047 billion for the four-week period ended July 29, 2006. The company’s comparable-store sales for July decreased 7% compared with a 4% decrease as reported in July 2006.

For the thirteen weeks ended Aug. 4, total company net sales were $3.69 billion, which is a decrease of 1% as compared to net sales of $3.72 billion for the thirteen weeks ended July 29, 2006. The company’s second quarter comparable-store sales decreased 5% compared with a decrease of 5% in the second quarter of the prior year.

For the second quarter of fiscal year 2007, the company expects diluted earnings per share on a GAAP basis to be 17 cents to 18 cents. This includes a benefit of about 1 cent per share from tax rate adjustments impacting the second quarter; a loss of 1 cent per share related to the discontinued operation of Forth & Towne and 1 cent per share of expenses associated with the company’s ongoing cost reduction initiatives.

Excluding the loss associated with the discontinued operation of Forth & Towne and the expenses associated with the cost reduction initiatives, the company expects diluted earnings per share for the second quarter of fiscal year 2007 to be 19 cents to 20 cents.