San Francisco -- Gap reported Thursday that profit for the quarter ended July 30 dropped 19% to $189 million, compared with $234 million in the year-ago period.
The retailer, which operates the Gap, Old Navy and Banana Republic banners, cited aggressive merchandise pricing reductions for the profit decline. Results beat analysts’ earnings expectations, but the declines still raised concerns about Gap’s performance in the upcoming fall and holiday shopping seasons.
Revenue rose 2% to $3.38 billion in the quarter, just missing Wall Street’s expected $3.39 billion in revenue. Same-store sales declined 2%. By division, Gap's domestic business was down 3%, while Banana Republic posted a 2% decline. Old Navy's domestic business was flat.
"We've been very clear internally and externally," Glenn Murphy, chairman and CEO, said during a conference call. "Our goal is to have moderate, steady growth in our domestic business and we've not achieved that."
Murphy, however, offered some reassurances to investors, saying “we have far greater opportunities than challenges ahead of us. Every brand, division, and geography is focused on what matters most -- delivering consistent, great product and more effective marketing in order to drive higher levels of performance.
Murphy said the retailer’s top priorities are to increase marketing and turn around its women's business.