Gap Profit Up on Cost-Cutting Moves
San Francisco, Gap Inc. said Wednesday its third-quarter profit rose 26%, largely due to lower marketing costs.
But the company’s cost-cutting campaign couldn’t compensate for a slowdown in sales at its Gap and Old Navy chains. Companywide revenue was flat, and same-store sales fell 5%.
The company said net income for the quarter ended Nov. 3 rose to $238 million from $189 million, or 23 cents per share, in the year-ago period. Sales were flat at $3.85 billion.
“We feel this is going to be a tough economic environment this upcoming holiday season,” chairman and CEO Glenn Murphy said in a conference call.
Gap, which also operates Banana Republic stores, said it cut marketing expenses by about $75 million in the quarter, as planned.
On the sales side, one of the few bright spots came from online sales, which surged 36% to $247 million, compared with $182 million for the third quarter of last year. Gap operates online shoe store Piperlime, gap.com and other e-commerce sites.
Gap is reorganizing its North American real-estate holdings, selling underperforming, older stores in aging markets and buying property in hot growth suburb and urban retail centers.
GameStop reports strong 3Q earnings
GRAPEVINE, Texas GameStop today reported that earnings for the third quarter ended Nov. 3 were $52 million. Diluted earnings per share were 31 cents for the third quarter of 2007.
The company reported that total sales increased 59.3% to $1.6 billion in comparison to $1 billion in the prior year quarter. Comparable-store sales increased 46.3% during the third quarter, also beating previously released guidance of 30% to 32%.
Richard Fontaine, GameStop’s chairman and ceo, stated, “Our third quarter sales and earnings are a reflection of not only the real momentum in the video game business as a whole, but a particularly strong statement that GameStop’s model continues to run ahead of the growth curve. We had an outstanding quarter both domestically and internationally, while our e-commerce division, GameStop.com, and video game publication, Game Informer, had record quarters.”
For the fourth quarter of fiscal 2007, GameStop is forecasting comparable-store sales to range from up 7% to up 9%, on top of comparable-store sales of 26.5% in the fourth quarter of fiscal 2006 when the Nintendo Wii and Sony’s Playstation 3 were launched. Diluted earnings per share are expected to range from 95 cents to 97 cents compared to earnings per share of 81 cents in the fourth quarter of 2006.
The company has also raised its fourth quarter guidance. The company now expects full year 2007 diluted earnings per share guidance to range from $1.61 to $1.63. Total revenues are now projected to grow between 28% and 29%, with expected comparable-store sales ranging from up 20% to up 21%.
Bausch & Lomb names general counsel
ROCHESTER, N.Y. Bausch & Lomb has named Robert Bailey corporate vp and general counsel. Bailey was most recently vp, assistant general counsel and assistant secretary for the company.
Bailey re-joined Bausch & Lomb in 1997 after serving as associate general counsel and assistant secretary at Goulds Pumps from 1995-1997. He first joined at Bausch & Lomb as counsel from 1994 to 1995. He began his legal career as an associate with what is now the Nixon Peabody law firm in Rochester, N.Y.
Bailey replaces Robert Stiles who has announced his intention to retire from Bausch & Lomb in 2008, after a career spanning more than 25 years with Bausch & Lomb, most recently as senior vp and general counsel.