Gap Q2 net sales decline 2 percent, reaffirms earnings guidance

Reporting its second quarter fiscal year 2015 results, Gap also reaffirmed its full-year earnings per share guidance to be in the range of 2.75 dollars to 2.80 dollars. Gap’s comparable sales for the second quarter were down 2 percent versus flat last year and net sales decreased 2 percent to 3.90 billion dollars compared with 3.98 billion dollars for the second quarter last year. On a constant currency basis, net sales were about flat compared with last year.

On a reported basis, the company’s diluted earnings per share were 0.52 dollar, including the negative impacts associated with foreign currency fluctuations, West Coast port delays, and the strategic actions. Excluding the negative impact of about 0.12 dollar from the strategic actions, the company’s adjusted diluted earnings per share were 0.64 dollar for the second quarter of fiscal year 2015.

“I remain confident in our strategies to improve business performance and drive loyalty going forward,” said Art Peck, Chief Executive Officer, Gap, adding, “Our evolving product operating model is laying the foundation to more consistently deliver on-trend product collections across our portfolio.”

For the first half of fiscal year 2015, the company’s diluted earnings per share were 1.09 dollars and adjusted diluted earnings per share were 1.42 dollars, or an increase of approximately 12 percent compared with adjusted diluted earnings per share for the first half of fiscal year 2014, which excludes a 0.05 dollar gain on asset sale.

Comparable sales at Gap Global were negative 6 percent versus negative 5 percent last year, at Banana Republic Global, negative 4 percent versus flat last year and Old Navy Global, positive 3 percent versus positive 4 percent last year.

Including the company’s dividend, shareholder distributions totalled about 800 million dollars for the first half of fiscal year 2015, underscoring the company’s commitment to returning excess cash to shareholders. The company paid a dividend of 0.23 dollar per share during the second quarter. In addition, on August 13, 2015, the company announced that its Board of Directors authorized a third quarter dividend of 0.23 dollar per share.

The company ended the second quarter of fiscal year 2015 with 3,751 store locations in 51 countries, of which 3,309 were company-operated. While the company continues to pursue its previously stated growth initiatives with a focus on Asia, global outlets and Athleta in the US, it now expects its overall store count and square footage to remain flat in fiscal year 2015, as compared to last year due to Gap brand store closures.