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NEW YORK — Apparel retailer Gap Inc. reports earnings for its fiscal second quarter after the markets close on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Like many apparel chains, San Francisco-based Gap Inc., which operates stores under its namesake plus Old Navy and Banana Republic, continues to grapple with sluggish sales as shoppers focus on necessities.
The company hopes lower-priced Old Navy, which has been retooled this year to cater in part to frugal moms, will be a vehicle for growth amid the recession. So far, its merchandise efforts are gaining traction, but company officials have said more work needs to be done to improve sales.
To drive customers to Gap stores, the company is counting on an aggressive relaunch of its denim collection that began this month, overhauling how the clothes fit and marketing them heavily in stores.
Gap Inc.'s same-store sales slipped 8 percent in July compared with a year earlier, less than the 8.5 percent decline predicted by analysts. Banana Republic stores in North America posted a 7 percent decline, while Gap North America reported a 9 percent decline. Same-store sales for Old Navy North America fell 8 percent, while international same-store sales dipped 4 percent.
Same-store sales — sales at stores open at least a year — are considered a key indicator of a retailer's health.
BY THE NUMBERS: Gap expects second-quarter profit of 30 cents to 32 cents per share. Analysts surveyed by Thomson Reuters on average forecast profit of 32 cents per share on revenues of $3.2 billion. In the second quarter a year ago, Gap earned 32 cents per share on revenue of $3.5 billion.
ANALYST TAKE: Richard Jaffe, an analyst at Stifel Nicolaus & Co., told investors in a note Tuesday that "product and marketing initiatives at Old Navy and Gap will prove key for" the second half of the year. He called early indications "encouraging."
WHAT'S AHEAD: Analysts will want to know how Gap's denim relaunch is faring and whether Old Navy is competitive. They will also be looking for any outlook for the holiday shopping season.
STOCK PERFORMANCE: Gap shares rose 1.5 percent during the quarter, which ended Aug. 2, and 38 percent from the beginning of the year. The shares are 4.3 percent lower than a year ago but closed Tuesday at $18.52, near the top end of their 52-week range of $20.80 and $9.41.
