Gap reported a 2 percent increase in comparable store sales for the second quarter as the retail chain’s revenue topped analyst estimates, though its stock was down in after-hours trading on Thursday (Aug. 23).
The chain reported net sales of about $4.09 billion for the quarter ended Aug. 4, up 8 percent year over year. That beat the Zacks Consensus Estimate by 2.52 percent. Gross profit was $1.63 billion, a 10 percent year-over-year increase. Earnings per share stood at 76 cents, up from 58 cents for the same period last year, and above the 72 cents per share expected by analysts.
By brand, net sales increased about 13 percent for Old Navy, remained virtually unchanged for Gap Global and increased about 4 percent for Banana Republic. U.S. sales accounted for 82 percent of the brand’s net sales during Q2, up slightly from 80 percent for the same period a year ago. The share of sales in Asia declined slightly, accounting for 6 percent during Q2, down from 8 percent in the year-ago period.
When going by comparable store sales, revenue increased 5 percent year over year in Q2 for Old Navy, declined 5 percent for Gap Global and increased 2 percent for Banana Republic.
“The second quarter played out largely as expected, and we are reaffirming our guidance on the year,” said Teri List-Stoll, Gap’s executive vice president and chief financial officer. The company said it expected that full-year diluted earnings per share would range from $2.55 to $2.70. Comparable sales would be flat or up slightly.
The company so far has spent about $326 million on capital expense, a category that includes “transformative infrastructure investments to support its omnichannel and digital strategies, such as information technology and supply chain.” That spending will reach $600 million for the full fiscal year.
“The company continues to expect to open about 25 company-operated stores, net of closures and repositions in fiscal year 2018,” Gap said. “In line with its strategy, the company expects store openings to be focused on Athleta and Old Navy locations, with closures weighted toward [the] Gap brand and Banana Republic.”