SAN FRANCISCO – Gap Inc. (GPS) on Thursday said earnings for the second quarter rose 39 percent, but the retailer warned of a weak sales performance so far this month and lowered its profit forecast for the year.
Net income increased to $272 million, or 30 cents per share, from $195 million, or 21 cents per share, a year earlier. The result was two cents above the mean estimate of analysts surveyed by Thomson Financial.
Sales were essentially flat at $3.72 billion. Same-store sales, or sales at stores open at least one year, were down 3 percent. Such sales were flat in the year-ago period.
"In the second quarter, we delivered respectable financial results ... but our summer product performance continued to be challenging," said Gap Chief Executive and President Paul Pressler (search).
Gap warned that August month-to-date sales are far below expectations, causing it to lower its estimate for full-year earnings by 14 cents per share to a range of $1.30 to $1.34. Gap said its earlier forecast of $1.44 to $1.48 per share was based on a belief that efforts to improve performance would begin to gain momentum by the fall.
The company also cited concerns about larger economic trends in revising its guidance.
Analysts were expecting the company to post a profit of $1.41 for the year.
Earlier this year, following a string of disappointing quarterly performances, the company made numerous changes to business strategy, including a new "merchandise aesthetic" that executives described as "fresh, casual, American style," with an emphasis on denim.
Gap reported its financial results after the close of trading. Its shares declined 56 cents, or 2.8 percent, to $19.59 in the extended session after dropping 32 cents to $20.15 in regular trading on the New York Stock Exchange (search).