NEW YORK (AP) — Gap is keeping its fiscal-year profit forecast unchanged after further struggles in the second quarter marked by weakness at its namesake and Banana Republic stores that offset rising sales at Old Navy.
The San Francisco company also said Thursday its plan to close 175 Gap stores in North America, as well as some locations in Europe, will cost a bit less than it expected.
During the quarter, the company said it would close some Gap locations as it tries to strengthen the brand, with most of the closures coming by the end of January. It closed 26 of those stores over the three months that ended on Aug. 1 and opened six more. The company will also eliminate 250 positions at its headquarters. Gap now expects $130 million to $140 million in charges connected to those moves, down from an estimate of $140 million to $160 million.
Gap Inc. said it expects to earn between $2.75 and $2.80 per share for the year. Analysts expect $2.74 per share on average, according to FactSet.
The San Francisco company said its net income fell 34 percent on costs related to the store closings, shipping delays on the West Coast, and the strong U.S. dollar. Its overall sales fell 2 percent, with Old Navy remaining the bright spot.
Gap said it earned $219 million, or 52 cents per share. It said its net income totaled 64 cents per share if costs related to the store closings are excluded. Its revenue decreased 2 percent to $3.9 billion.
The results were in line with estimates Gap made last week.
Gap was a big hit with a generation of khaki pants-wearers but it's struggled to keep up with design trends in recent years. The company and some of its competitors have lost ground to "fast fashion" chains that refresh their stores with the latest styles more often. The company's shares have fallen about 22 percent over the last year.
The stock slipped 3 cents to $33.63 in extended trading following the release of the earnings report.