Despite promises to turn things around, Gap Inc.’s problems appear to be far from over, as the retailer reported another quarter of negative sales growth.
While fiscal results for the quarter were largely in line with what analysts had predicted, the company lowered its yearly outlook below analyst targets. Earnings for the quarter total $125 million compared to $219 million in the same period last year. Excluding restructuring costs, Gap earned 60 cents a share in the quarter, compared with 64 cents a share a year ago
Sales at Gap Inc.’s namesake brand were down 3 percent during the quarter, better than the 6 percent drop the brand suffered during the same period last year, but things were far worse at Banana Republic, where sales were down 9 percent compared to 4 percent in the year prior.
Same-store sales were down 2 percent for the quarter, as Gap works to close nearly 75 locations in its fleet by the end of the year. It closed 22 through the end of the second quarter.
Gap cut its guidance for the remainder of the year, saying it expects full-year profit of $1.87-$1.92 per share. Analysts on average were expecting earnings of $1.96, according to Thomson Reuters I/B/E/S.
Gap CEO Art Peck expressed his disappointment in a statement, but remained optimistic about the path the company is taking. Whether or not investors will remain as patient is yet to be seen.
“While I remain unsatisfied with the pace of improvement across the business, I am encouraged by the underlying signs of progress in Q2, as demonstrated by healthier merchandise margins,” said Peck. “Our management teams share my urgency to create fundamental change that will drive long-term performance.”