Sales Still Down at Gap

SAN FRANCISCO – Gap Inc. announced its second quarter earnings today: $152 million (19 cents per share), a 19 percent increase over last year’s $128 million (15 cents per share). Gap still struggles though. Net sales, down one percent, were at $3.69 billion. Same store sales were down five percent in the second quarter, but online sales increased 26 percent to $172 million, compared with $136 million in the second quarter last year.

By store, Banana Republic did the best in the second quarter with same store sales in North America up four percent. Gap North America stores were down six percent and Old Navy North America stores were down even further at nine percent. Old Navy did better internationally however – same store sales were up three percent.

Gap Inc.’s board of directors spoke highly of the company’s new CEO, Glenn Murphy, who came to the apparel retail giant from the largest pharmacy chain in Canada. “During the second quarter, we made solid progress stabilizing our business, streamlining our organization and importantly, hiring our new chairman and chief executive officer, Glenn Murphy,” said board member Bob Fisher. “I am confident that under Glenn’s leadership and the creative direction set by our brand presidents, we will continue to make improvements to the business and deliver improved returns to our shareholders.”

Before Murphy’s hiring, Gap Inc. had made more than 2,000 job cuts in an effort to save money, reportedly about $100 million before taxes.

Another cost-saving measure was the elimination of the Forth & Towne stores, a chain focused on middle-aged women. The company says that losses in the second quarter related to Forth & Towne’s demise were about $9 million; $54 million for the first half of 2007.