US clothing group Gap Inc.’s income declined 19% in the second quarter, but the company posted quarterly profits that were above analyst forecasts, reports said.
Glenn Murphy, Chief Executive at the group which owns Gap, Old Navy and Banana Republic, attributed losses to domestic market problems and also issues with womenswear product at its flagship brand Gap.
“We need to get better right away in our women’s product,” he is said to have told investors and analysts in a webcast. “We’re trying to transition the Gap brand aesthetic. It got a little too modern for our customers.”
Gap’s fiscal second-quarter net income was $189m (£114.4m), or $0.35 (£0.212) a share, compared with $234 million (£141.8), or $0.36 (£0.218) a share, in the previous year. Net sales were up 2% to $3.39bn (£2.05bn). Same-store sales were down 2%.
Thomson Reuters recently estimated that Gap would make $0.33 a share on revenue of $3.34 billion (£2.02bn).
According to reports, Gap has lost an estimated quarter of its market value this year as investors have begun to question the company’s ability to increase sales after several declines in market share.
Murphy acknowledged the losses, but highlighted the company’s international strength and online business in Asia and Europe.
He was also optimistic about growth in the two regions. Gap is opening 10 new stores in China this year, including a flagship in Hong Kong which is set to open in November. The company is also expanding in Italy. It recently unveiled a flagship in Rome and five more stores are planned in the country by the end of the year. In addition, franchise agreements have been made in Egypt and the Ukraine, along with partnerships in Serbia and Morocco.