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.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)