Gap Lifts FY Outlook Following Stellar Q2


Gap Inc. has raised its full-year earnings outlook after strong sales of summer merchandise at its Gap and Old Navy stores helped lift second-quarter profit by nearly 25%.

The San Francisco based company, which also operates the Banana Republic, Piperlime, Athleta and Intermix stores, said net income surged to $303 million, a rise of 24.7% on last year’s $243 million.

Sales in the three months to August 3 climbed 8% to $3.87 billion compared with $3.58 billion a year earlier, while comparable sales increased 5%. By brand, comparable sales rose 6% at both Gap and Old Navy, but fell 1% at Banana Republic.

Gross margin increased 60 basis points to 40.5% in the quarter, while operating margin expanded by 160 basis points to 13.5%.

“We delivered strength in both our top and bottom lines this quarter,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “As we move into the second half of the year, we remain focused on growing revenue and driving continued momentum across our portfolio of brands.”

The latest steps here include opening the first Old Navy store in China, expanding Gap to Taiwan, and growing its Athleta brand to 65 stores by the end of the current fiscal year.

Looking ahead, the company raised its full year earnings per share guidance to $2.57 to $2.65, up from earlier forecasts of $2.52 to $2.60.

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