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Aug 21, 2008 4:01 pm US/Pacific
Cost-Cutting Boosts Gap's 2nd-Quarter Profit
SAN FRANCISCO (AP) ―
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A San Francisco Gap Store.
AP
Apparel retailer Gap Inc. said Thursday that its second-quarter profit rose 51 percent, despite a sales decline, helped by cost-cutting and tight control on inventory.
The San Francisco-based company said profit for the three months ended Aug. 2 rose 51 percent to $229 million, or 32 cents per share, from $152 million, or 19 cents per share, a year earlier.
Analysts polled by Thomson Reuters predicted a profit of 30 cents per share and the company had forecast earnings of 30 cents or 31 cents per share.
Revenue fell 5 percent to $3.5 billion from $3.69 billion last year, while analysts expected revenue of $3.52 billion.
Sales in stores open at least one year, a key retail metric known as same-store sales, fell 10 percent. In North America, same-store sales fell 6 percent at both Gap and Banana Republic and fell 16 percent at Old Navy. International same-store sales also fell 6 percent.
Inventory per square foot fell 17 percent year-over-year.
Gap reaffirmed earnings guidance of $1.30 to $1.35 per share, while analysts expect a profit of $1.34 per share.
The company said it will open 15 fewer stores, mainly Banana Republics stores, than previously expected during the year, and now expects to open a total of 100 stores.
Earlier on Thursday, Gap named Tom Wyatt, a 30-year retail veteran, as president of its struggling Old Navy chain.
Wyatt, 53, had served as acting president of Old Navy since February, when Dawn Robertson stepped down after struggling for 16 months to turn the division around.
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