Gap 2Q Profit Plunges
New York City, The prospects for a quick turnaround at Gap Inc. diminished Thursday after the retailer reported more than a 50% drop in second-quarter profit and cut its earnings forecast for the year.
Gap Inc. reported its net income for the quarter ended July 29 dropped to $128 million from $272 million for the same period last year. Sales were flat at $3.72 billion, while comp-store sales fell 5%, compared with a prior-year decrease of 3%. Gap cited sluggish sales and “aggressive” discounting.
“The second quarter was more challenging than we expected,” Paul Pressler, CEO and president, Gap Inc., said in an address to investors during a conference call Thursday. “While we are encouraged by improved performance at Banana Republic, business was tough at Gap and Old Navy as we cleared through summer product. But across all businesses, I believe we are making progress.” Comp-store sales at Gap stores fell 6% in the second quarter, while comp-stores sales at Old Navy slumped 5% and comp-store sales at Banana Republic slipped 1%.
IKEA Plans First Ohio Store
West Chester, Ohio, IKEA announced that it will build its first Ohio store in the Cincinnati suburb of West Chester. A 339,000-sq.-ft. store is planned on 56 acres about 25 miles north of Cincinnati. IKEA said it would be selling about six acres for retail and restaurant uses. The store will include three model homes, a children’s play area and a 300-seat restaurant, the company said. The store is expected to open in fall 2007.
Copeland Sports Announces Restructuring Changes
San Luis Obispo, Calif., Sporting goods retailer Copeland Sports has announced ownership and management changes, along with a new financing agreement, in conjunction with the filing of a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code.
Tom, Jim and Mike Copeland have reacquired ownership of the company, and will resume an active management role. Copeland Sports also appointed Barry Soosman, who was formerly an executive VP of Guitar Center, to serve as CEO.
Copeland Sports filed a voluntary petition for relief under Chapter 11 on Monday. At the same time, the company announced that it had reached an agreement with Wells Fargo Retail Finance, LLC on a $25 million debtor-in-possession credit facility.