Gap reported mixed results in its fiscal second quarter, along with underwhelming guidance for the current quarter. The company warned of an “uncertain consumer” as it posted another quarter of declining sales across all its brands. While Gap beat Wall Street estimates on earnings per share, it fell short on revenue. The company’s net income for the quarter was $117 million, or 32 cents per share, compared to a loss of $49 million, or 13 cents per share, in the same period last year. Excluding one-time restructuring costs, Gap reported a net income of 34 cents per share.
Sales dropped 8% to $3.55 billion, down from $3.86 billion in the previous year, indicating a steeper year-over-year sales decline than in the previous quarter. Gap has been grappling with challenges in retaining market share and relevance amid a tough macroeconomic environment.
The company’s largest revenue driver, Old Navy, experienced a 6% decline in sales, reflecting its low-income customer base cutting back on spending due to inflation and economic pressures. Gap’s business has also been impacted by store closures and changing consumer preferences.
Gap’s new CEO, Richard Dickson, who previously oversaw Mattel’s Barbie franchise, is tasked with revitalizing the brand’s image and performance. The company has undergone layoffs and restructuring to enhance its nimbleness and creative efforts.
Despite facing an uncertain consumer landscape and challenges in several of its brands, Gap’s executives expressed optimism about progress and a focus on growth-driving initiatives, aiming to redefine the brands’ meaning to consumers and leverage the company’s legacy to shape a new future.
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