Gap profit edges up 3% in Q2, sales beat Street

New York City Gap said late Thursday that net income rose 3% in the second quarter, to $234 million, compared with $228 million in the year-ago period. Results were helped by rising sales at its Old Navy and Banana Republic banners, which offset a drop at Gap stores.

Revenue surged to $3.32 billion, up from $3.24 billion. Sales beat Wall Street expectations of $3.31 billion for the quarter.

But CEO Glenn Murphy said on a call with investors late Thursday that he was let down by the results.

"I was disappointed in our inability to generate the sales that we had expected to generate in the second quarter," said Murphy, noting that in the past four to six weeks, he has been meeting with brand presidents and their teams to find ways to drive sales the rest of the year.

Same-store sales for the quarter were up 1% overall, but at Gap stores the measure fell 4%. Same-store sales rose 3% at Banana Republic’s North America stores, 2% at Old Navy North America and 3% in the company’s international division.