American fashion company Gap has experienced a profit drop in its second quarter of 2015. Turnover also dropped, but the company still managed to reach expectation levels.
Old Navy keeps growing
Gap's turnover dropped 2 % in the second quarter, down to 3.9 billion dollars (3.5 billion euro), which meant it still managed to beat analysts' expectations. The Gap chain's like-for-like turnover dropped 6 % in the second quarter, while Banana Republic fell 4 %. Old Navy on the other hand did well, with a 3 % growth.
Gap managed a 332 million dollar (295 million euro) profit last year, but for this year, it will have to accept a 219 million dollar (195 million euro) profit. Part of the profit loss comes on the back of a restructuring program, mainly within the Gap chain.
Gap expects to spend 130 to 140 million dollars (115 to 124 million euro) in that regard this year, with plans to shut down 175 Gap stores and cut 250 jobs at the main office. That is CEO Art Peck's way to get the Gap and Banana Republic brands back on track and towards Old Navy's success.
In an attempt to cash in on the success chains like H&M and Zara have had, Gap will trial fast fashion in several stores in order to see whether that will help to tune into the fast-evolving fashion trends.