NEW YORK — Come October, Gap Inc. will be expanding its offerings — in plastic.
As the San Francisco-based company reported a marginal decline in earnings for the second quarter, president and chief executive officer Paul S. Pressler unveiled plans for a new credit card program, offering customers a choice of newly designed Gap, Banana Republic or Old Navy cards that will allow holders to earn points redeemable at any of the company’s stores.
“The consumer proposition is simple,” said Pressler during the call, “one credit card to shop, earn points and redeem rewards across all three of our brands, including online and outlet stores.”
According to Pressler, current cardholders spend almost twice as much as other customers. They are also more likely, said Pressler, to shop at sister stores, with 65 percent of Gap cardholders saying they also shop at Old Navy or Banana Republic. For Banana cardholders that number shoots up to 75 percent. “We see a significant opportunity to drive sales by encouraging cardholders to purchase within Gap Inc.’s family of brands,” said Pressler. The launch date for the credit card program is Oct. 11.
While the new credit card initiative and the Sarah Jessica Parker ad campaign could be a boon for fall, second-quarter results were hampered by a dropoff in sales during June and July, as well as the company’s continued efforts to reduce its hefty debt load.
For the three months ended July 31, the retailer saw earnings slide 7.2 percent to $194 million, or 21 cents a diluted share, in line with Wall Street’s consensus estimate. Comparatively, the company reported earnings of $209 million, or 22 cents, in the year-ago quarter.
Sales inched up 1 percent to $3.72 billion from $3.69 billion. Sales at Gap remained flat at $1.2 billion while Old Navy retained its place as the company’s top revenue generator, with sales rising 6.7 percent to $1.6 billion from $1.5 billion. Banana Republic sales rose 6.2 percent to $528 million against sales of $497 million.
Kinks are still being worked out, according to Pressler. “At Old Navy our summer circulars were timed too close together, and we also feel we have an opportunity to better differentiate our marketing messages.”
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"