Gap Profit Down, But Tops Street; Outlook Weak

(RTTNews) - Apparel retailer Gap Inc. (GPS), on Thursday reported a decline in profit for the second quarter, hurt largely by continued weak sales at its namesake brand and Banana Republic. Earnings for the quarter trumped Wall Street estimates by a penny, while revenues fell short of expectations.

San Francisco-based Gap's second-quarter profit plunged to $125 million or $0.31 per share from $219 million or $0.52 per share last year.

Gap's adjusted earnings for the quarter were $0.60 per share. Analysts polled by Thomson Reuters had a consensus earnings estimate of $0.59 per share for the quarter.

Sales for the quarter dropped to $3.85 billion from $3.90 billion last year. Analysts had expected revenues of $3.79 billion for the quarter.

Gap's comparable sales for the quarter declined 2 percent, as same-store sales at Gap slumped 3 percent and Banana Republic dropped 9 percent, Meanwhile, Old Navy reported a flat same-store sales.

CEO Art Peck said, "While I remain unsatisfied with the pace of improvement across the business, I am encouraged by the underlying signs of progress in Q2, as demonstrated by healthier merchandise margins."

Looking forward to full year 2016, Gap now expects earnings of $1.87 to $1.92 per share. Analysts currently estimate earnings of $1.96 per share.

GPS closed Thursday's trading at $25.88, up $0.42 or 1.65%, on the NYSE. The stock, however, dropped $0.08 or 0.31% in the after-hours trade.