Gap Q2 profit climbs 29%; raises guidance
San Francisco — Gap Inc. reported Thursday that net income for the quarter ended July 28 surged 29% to $243 million, prompting the retailer to raise its guidance for full-year 2012.
Sales increased 6% to $3.58 billion, compared with $3.39 billion for the second quarter last year. Same-store sales rose 4%.
“Our continued focus on product and store execution are helping to drive positive momentum and we’re committed to sustaining solid performance for the remainder of the year,”said Glenn Murphy, chairman and CEO.
By banner, second-quarter same-store sales rose 7% at Gap North America stores, compared with a negative 3% last year; for Banana
Republic North America, same-store sales also rose 7% after recording a 2% decline last year; and Old Navy posted a 3% same-store sales rise this quarter against flat comps last year.
During the quarter, Gap opened 11 Athleta stores, doubling its fleet to 22 stores across North America. The company said it continues to expect net openings of about 15 company-operated stores and about 50 to 75 franchise stores during fiscal year 2012. Square footage for company-operated stores is expected to decrease by about 1% by the end of fiscal year 2012 compared with the end of fiscal year 2011.
Comps decline 4.7% at Kmart
Things are looking up for Sears Holdings. The company only lost $132 million during its second quarter.
The $132 million loss was an improvement from the prior year when the company reported a $146 million loss. Revenues totaled $9.5 billion for the quarter ended July 28, down 6% from $10.1 million in the second quarter of 2011. The company cited lower domestic comparable-store sales for the quarter and the effect of having fewer Kmart and Sears Full-line stores in operation. Sears Canada’s comparable-store sales also decreased and included a decline of $55 million due to changes in foreign currency exchange rates.
"We continue to make progress against the priorities we outlined in our fourth quarter earnings release and call. In particular, we have improved our profit position, as we reduced expenses and expanded margin rate through more effective promotional design," said Lou D’Ambrosio, Sears Holdings’ CEO and president. "We have also successfully lowered inventory, reduced debt from year end, and enhanced our liquidity. In addition, the Sears Hometown transaction remains on track to close in the third quarter."
Domestic-comparable store sales declined 3.7%, comprised of declines of 2.9% at Sears Domestic and 4.7% at Kmart. The largest impact was in consumer electronics. Lawn and garden also declined due to drought conditions.
Earlier this week, Sears also announced that it would be spinning off its Hometown and Outlet stores, along with some hardware stores, into a separate, publicly traded company.
For the first 26 weeks, Sears reported net income of $57 million, compared with a loss of $316 million in the prior-year period. Revenues for this period totaled $18.7 million, down 5% from $19.7 million in 2011.
Walmart, Target and others form mobile payments group
Merchant Customer Exchange is the name of a new mobile payments group in which Walmart and other leading retailers are involved.
Expectations are high that mobile payments represent the future of commerce and group of leading retailers this week formed a new organization to offer an alternative way to pay.
The group is called the Merchant Customer Exchange and currently consists of 14 retailers. Plans call for development of a payment application available for smartphones that offers secure technology to process transaction.
"We believe that merchants are in the best positions to deliver mobile payments to billions of people," said Michael A. Cook, vp and assistant treasurer of Walmart said in a New York Times article.
To visit the organization’s website click here.
To read the press release announcing the organization’s objective and membership, click here.
To read the New York Times perspective on the issue, click here.