CHICAGO – Gap Inc. (GPS), the largest U.S. specialty apparel retailer, Thursday reported a slight decline in quarterly profit, meeting lowered forecasts, after summer clearance sales drew surprisingly small crowds.
The San Francisco-based retailer also said operating costs would rise more than expected this year, and it planned to close more stores than originally planned.
The retailer said it earned $194 million, or 21 cents per share, in the fiscal second quarter ended July 31, compared with $209 million, or 22 cents per share, in the same period a year earlier.
Analysts, on average, expected earnings of 21 cents per share, according to Reuters Estimates (search). Gap warned on August 5 that earnings would likely be between 19 cents and 21 cents per share. At the time, analysts had expected 28 cents.
Results in the latest period include a charge of 4 cents per share for early debt retirement. Gap said the early debt retirement expense would increase full-year operating costs, which it now expects to be up about 11 percent instead of the 9 percent to 10 percent increase it originally planned.
The retailer also said it plans to close about 150 stores this year -- 15 more than previously expected -- and open about 125 locations. The store openings will be weighted toward Gap's lower-priced Old Navy (search) chain, while the store closings will include more of its namesake Gap stores.