Gap reports strong Q2, increases outlook

Gap net sales for the second quarter of 3.7 billion dollars were up 5 percent with comparable sales up 3 percent year-over-year.

Increasing its gross margin and operating income outlook for the year ahead, the company said it expects FY24 operating income in the 50’s growth range and gross margin expansion of 200 bps.

"In comparison to where we were only one year ago, we are in a stronger position across key metrics that matter – including net sales, margins, and our cash position – and we are making consistent progress in the reinvigoration of our brands," said the company’s president and CEO Richard Dickson.

Highlights of Gap’s Q2 results

Store sales increased 4 percent and online sales increased 7 percent compared to last year, representing 33 percent of total net sales.

The company ended the quarter with 3,568 store locations in about 40 countries, of which 2,541 were company operated.

The company’s gross margin of 42.6 percent increased 500 basis points for the second quarter.

Operating income was 293 million dollars with an operating margin of 7.9 percent and net income was 206 million dollars with diluted earnings per share of 54 cents.

Comparable sales results across Gap brand portfolio

Old Navy’s net sales of 2.1 billion dollars were up 8 percent compared to last year and comparable sales were up 5 percent.

Gap brand net sales of 766 million dollars increased by 1 percent, while comparable sales were up 3 percent.

Banana Republic reported net sales of 479 million dollars, flat compared to last year. Comparable sales were also flat.

Net sales at Athleta of 338 million dollars were down 1 percent and comparable sales were down 4 percent. The company expects Athleta to return to positive comparable sales growth for the remainder of the year.