Gap Inc. missed Wall Street’s sales expectations, but the company posted a hefty profit gain and increased it fiscal 2007 earnings guidance.

San Francisco-based Gap also announced an additional $1.5 billion share repurchase program, for a total buyback authorization total of $5.75 billion since October 2004.

For the second quarter ended Aug. 4, Gap reported net income that rose 19 percent to $152 million, or 19 cents a diluted share, from $128 million, or 15 cents a share, in the year-earlier period. Excluding charges related to cost reduction initiatives, Gap earned 21 cents a share. Second-quarter revenue fell slightly to $3.69 billion, down 1 percent from $3.71 billion in 2006’s second-quarter. Analysts expected Gap to earn 19 cents a share on revenue of $3.72 billion.

The operator of Gap, Old Navy and Banana Republic stores revised its fiscal 2007 earnings guidance. Gap now sees full-year diluted earnings per share between 83 cents to 88 cents, up from its previous estimate range of 76 cents to 86 cents a share.

Excluding expenses associated with the discontinued operations of its Forth & Towne chain, Gap expects fiscal earnings between 90 cents and 95 cents a share, up from its previous outlook range of 80 cents to 90 cents a share.

Wall Street had expected full-year earnings of 93 cents on revenue of $16.02 billion.<br
For complete coverage, see Friday's issue of WWD.

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