Gap 2Q Profits, Sales Fall

Despite the fact that it narrowly beat analyst expectations, casual clothing retailer Gap Inc. has posted a second-quarter profit drop of 0.4 percent off the heels of weaker sales in all four of its division. The results come as Gap continues in its efforts to complete a successful turnaround, reinvigorating its brand and maintaining a smaller inventory.
 
Gap has faced stiff competition from trendier and flashier rivals such as Aeropostale and The Buckle, both of which managed to post strong results thanks to their success with younger shoppers. However, Gap hopes to combat the growing competition by focusing on advertising and marketing.
 
Earnings are down from $229 million last year to $228 million this year with a net sales decline of 7.3 percent to $3.24 billion. Same-store sales have dropped 8 percent, falling continuously across all of Gap’s divisions. Banana Republic, one of Gap’s more exclusive brands, had a 15 percent drop in sales, while Old Navy managed to post the smallest drop in sales at only 4 percent.

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