American fashion retailer Gap has increased its 2014 forecast after a higher-than-expected profit in its second quarter, especially thanks to excellent Old Navy sales.
Old Navy leads the pack
Old Navy Stores, a cheaper brand focused on an older audience than Gap and Banana Republic, managed a 4 % like-for-like turnover increase in its second quarter. Old Navy’s total turnover reached 1.622 billion dollars (1.2 billion euro), compared to 1.540 billion dollars the prior year.
Gap and Banana Republic’s numbers were not as positive: Gap’s like-for-like turnover dropped 5 %, while Banana Republic’s remained level. Gap’s total turnover, for the brand itself, dropped slightly from 1.471 billion dollars to 1.469 billion dollars (1.1 billion euro). Banana Republic’s total turnover grew from 686 million dollars to 704 million dollars (530 million euro).
Gap’s total turnover grew 3 % to 3.98 billion dollars (nearly 3 billion euro), while like-for-like turnover remained level. Net profit reached 332 million dollars (250 million euro), compared to the 303 million dollars a year before. That result has prompted the company to raise its full-year forecast to a 2.95 – 3 dollar profit per share.
Better than competition
Gap’s like-for-like turnover drop was mostly because of lousy results at several large American retailers. Gap had 3,594 stores worldwide at the end of the second quarter, while it hopes to open its first 2 stores in India early next year. It hopes to get 40 stores in India after that.
Gap still easily outperforms its competitors. Aeropostale’s turnover dropped 13 % in the second quarter, while American Apparel’s like-for-like turnover dropped 6 % in the second quarter.