(c) 2009 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.Gap Inc.'s quarterly profit fell slightly, though a focus on leaner inventory and traffic-driving promotions helped offset slower demand across all three of its major store brands.
Tepid results from the No. 1 U.S. clothing retailer, which owns the Gap, Old Navy and Banana Republic chains, came on the same day that competitors the Buckle Inc. and Aeropostale Inc. posted strong earnings, underscoring the appeal some flashier brands have with younger consumers.
Gap has been trying to turn itself around as it loses ground to trendier rivals. Gap stores launched a premium denim line earlier this month to compete with pricier lines like True Religion and 7 for All Mankind.
For its fiscal second quarter ended Aug. 1, Gap reported earnings of $228 million, or 33 cents a share, down from $229 million, or 32 cents a share, a year earlier.
Gap had earlier this month reported second-quarter net sales declined 7.3% to $3.25 billion. It said Thursday that same-store sales in the quarter dropped 8% from a year earlier.
Same-store sales continued to fall across all of its divisions. The higher-end Banana Republic brand posted a 15% same-store sales decline -- the largest of a Gap brand -- while the flagship Gap and Old Navy brands were off 10% and 4%, respectively.
International sales dropped 5%, while online sales improved 17% to $224 million. Gross margin grew to 39.7% from 38.2%.
Among other clothiers reporting earnings Thursday, teen retailer Buckle said its fiscal second-quarter profit rose 12% on continued revenue and margin growth, though sales momentum is slowing.
Buckle's trendy tops and edgy jeans, as well as its footwear, have so far helped it ride out the recession. The company targets fashion-conscious 12- to 24-year-olds with mid- to high-priced casual apparel.
Buckle's quarterly earnings came to $25 million, or 54 cents a share, up from $22.3 million, or 48 cents a share, a year earlier.
Still, the company's 22 straight months of double-digit same-store sales growth ended in June, though Buckle said Thursday that online sales jumped 39%.
Aeropostale's fiscal second-quarter profit jumped 83% as the teen-apparel retailer reported higher same-store sales.
Aeropostale has easily outperformed more expensive mall retailers. The company has reported double-digit increases in its same-store sales in all but two months this year, and last posted a decline in November.
For the quarter ended Aug. 1, Aeropostale reported earnings of $38.6 million, or 57 cents a share, up from $21.1 million, or 31 cents a share, a year earlier.
Also on Thursday, fellow teen retailer Wet Seal Inc. reported a 69% fall in profit, while Pacific Sunwear of California Inc. and Zumiez Inc. both swung to second-quarter losses on lower same-store sales.
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Ben Charny contributed to this report.
Credit: By John Kell
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