GAP HAS ANOTHER TOUGH QUARTER CITING A ‘CHALLENGING ENVIRONMENT’

Gap Inc.‘s fiscal second-quarter sales fell short of analysts’ expectations in what the apparel retailer’s CEO called a “challenging environment,” with all of its brands including Old Navy suffering a drop in demand, the company announced Thursday.

Old Navy, which has been a bright spot for the company in the past, suffered its worse comparable sales figures in three years ahead of a planned spin-off of the brand. The brand reported quarterly same-store sales fell 5 percent.

Overall, sales at the company’s Gap, Old Navy and other stores open for at least a year fell 4 percent in the second quarter ended August 3rd.

The San Francisco-based company said net income fell to $168 million, or 44 cents per share, from $297 million, or 76 cents per share, a year earlier. Net sales fell to $4.01 billion from $4.09 billion last year.

“We are operating in a challenging environment, but I remain confident in the strength of our brands and our plans for the future as we work to launch two independent, public companies,” said Art Peck, president and chief executive officer of Gap Inc. “Heading into the second half of the year, we remain highly focused on inventory and expense discipline to improve results, as well as delivering exceptional product supported by powerful marketing to drive customer engagement.”

Gap Inc. is still in the process of splitting its business and spinning off Old Navy into its own separate company, a deal it announced earlier this year. The move will leave Gap, Banana Republic, Athleta and Hill City in another holding company. That split is expected to be completed in 2020.