He didn’t exactly say that, but in his most upbeat conference call since joining Gap Inc. in 2007, chairman and chief executive officer Glenn Murphy said Gap’s second quarter was marked by “a lot of bright spots” and fueled by having the right styles, capitalizing on color, focusing on fit, and making “targeted investments in key categories where we wanted to dominate” including babyGap, denim, and suits and woven shirts at Banana Republic.
Gap’s net income for the second quarter rose 29 percent to $243 million, from $189 million in the year ago quarter. Diluted earnings per share increased 40 percent to 49 cents compared with 35 cents last year.
Net sales for the second quarter, which ended July 28, increased 6 percent to $3.58 billion compared with $3.39 billion for the year-ago quarter. Comparable-store sales increased 4 percent.
“Customers responded well to our product offerings across our brands, driving a healthy increase in sales and earnings per share during the quarter,” said Murphy, who for years has drawn skepticism from Wall Street and retail analysts about his ability to revive Gap, considering his background running drug stores in Canada and not as a fashion merchant.
“Our continued focus on product and store execution is helping to drive positive momentum and we’re committed to sustaining solid performance for the remainder of the year,” he said.
Given the second-quarter performance, the company raised its estimate for fiscal year 2012 diluted EPS to be in the range of $1.95 to $2.00, compared with $1.56 in fiscal year 2011.
While the signs point to a turnaround, Murphy was cautious, stating, “Sustained performance is what matters. Everybody is working hard to make sure we maintain the momentum in the back half.”
In North America, Gap and Banana Republic each had a 7 percent comp-store sales gain, while Old Navy was up 3 percent, making for a 4 percent comp overall. Direct sales rose 24 percent.
The only real concerns Murphy expressed were that traffic overall was negative, with the outlets and Old Navy experiencing better traffic than the Gap and Banana Republic, and that comparable-store sales abroad, with the difficult European economy, were negative 5 percent. But Murphy said he likes how Gap Inc. stores are concentrated in London, Paris, Milan and Rome, and positioned properly for when the continent rebounds.
Gap was able to overcome the traffic trends through higher average unit retail prices and better conversion rates driving the quarter. He added that a faster pipeline, getting some early reads on products through social media and forms of crowd sourcing, also helped the business.
In other highlights, Athleta opened 11 stores and will have 25 stores by yearend. Old Navy opened a store in Tokyo, its first unit outside North America, and also had an impressive response, setting the stage for a Japan rollout.
Murphy suggested Old Navy may be in for some major changes when its new president Stefan Larsson, formerly with H&M, starts in October. “He is coming in with a very strong perspective and position when it comes to product,” conceptually as well as from a design and merchandising standpoint, Murphy said.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye