Profit amounted to 64 cents a share, excluding the 12-cent impact from a move to close about 175 Gap stores and eliminate 250 corporate jobs, the San Francisco-based company said in a statement Thursday. That was in line with the company’s own projections and analyst estimates compiled by Bloomberg.
Art Peck, who took the chief executive officer job in February, is trying to shape up the company’s Gap and Banana Republic chains, which have trailed the performance of its lower-end Old Navy business. He’s also coping with a strong U.S. dollar, which has hurt the value of overseas sales, and inventory problems stemming from delays at West Coast ports. The company’s comparable sales fell 2 percent last quarter from the same time a year earlier.
“I remain confident in our strategies to improve business performance and drive loyalty going forward,” Peck said in the statement.
The stock was little changed in late trading after the results were posted. Gap shares had dropped 20 percent this year through the close of trading.
Gap reaffirmed its full-year earnings forecast of as much as $2.80 a share. It also said that its restructuring efforts may not be as costly as previously projected. The company now expects those actions to cost $130 million and $140 million, compared with earlier estimates of as much as $160 million.
Foreign currency translation hurt profit last quarter by about 4 cents a share, the company said. Net income fell 34 percent to $219 million, or 52 cents a share, from $332 million, or 75 cents, a year earlier. Net sales declined about 2 percent to $3.9 billion in the period, which ended Aug. 1.
In June, the retailer announced it would close about a quarter of full-price Gap locations and cut about 250 corporate jobs. Fixing the Gap brand has been the top priority for Peck, who was a company president before being named to the CEO job in October. As part of his efforts to shake up the business, executive Jeff Kirwan was tapped to be Gap’s president in November, and the creative director job was eliminated in January.
By Lindsey Rupp; editors: Nick Turner, Leslie Patton.