Gap strong in Q2, raises outlook
Gap Inc. beat the Street in its second quarter with both bottom and top line gains, boosted by its Old Navy division and fewer discounts.
The apparel retailer earned $271 million net income, or 68 cents per share, in the quarter that ended July 29. That's up from $125 million, or 31 cents per share, a year ago.
Excluding a one-time insurance gain related to a fire in 2016 at a Gap distribution center in Fishkill, New York, the retailer earned 58 cents per share. Analysts has expected earnings per share of 52 cents.
Total revenue fell 1.4% to $3.8 billion, just edging past analysts' estimate of $3.77 billion. (The translation of foreign currencies into U.S. dollars negatively impacted the company’s net sales for the second quarter of fiscal year 2017 by about $37 million.)
Same-store sales edged up 1% for their third consecutive quarterly increase. By brand, same-store sales rose 5% at Old Navy Global and fell 1% at Gap Global. Same-store sales fell 5% at Banana Republic Global.
“With a third consecutive quarter of comp sales growth, we are seeing our investments in product, customer experience, and brand equity begin to pay off,” said Art Peck, president and CEO, Gap Inc. “Based on the strength of the first half, we are pleased to increase our full year earnings guidance.”
Looking ahead, Peck said the company will focus on product categories that have clear differentiation. It also will continue to invest in its online and mobile offering, and take advantage of its operating scale to drive speed to market and responsiveness.
Gap raised its adjusted profit forecast for fiscal 2017 to $2.02 to $2.10 per share from $1.95 to $2.05 per share.
The company ended the quarter with 3,642 store locations in 47 countries, of which 3,179 were company-operated.
Target unveils three new brands
Target Corp. is giving shoppers an early look at three new private brands that will debut in its stores starting in late August.
The retailer has posted details about the brands, along with photos from their look books, on its website. The three new collections are part of 12 private-label brands Target plans to launch during the next 18 months.
Here is a look at the three brands:
A New Day
Apparel and footwear from this contemporary women's fashion brand will arrive in late August with jewelry and accessories launching in September. New designs across all categories will be introduced monthly.
Goodfellow & Co.
This men's apparel and accessories brand is described as "core wardrobe essential with a modern take on classic themes." Available in a range of sizes, including big and tall, it hits the stores in September, with new items dropping throughout the fall.
Featuring modern home pieces, this brand is focused on "making environments effortlessly functional through smart solutions for urban, small-space living." It arrives on Sept. 19, with collection refreshes continuing throughout the year.
"These brands are the perfect example of what makes Target 'Tar-zhay.' Each offers incredible design, great quality and truly unbeatable value. That’s something you can find only at Target,” said Mark Tritton, Target’s executive VP and chief merchandising officer.
Ross Stores tops sales, earnings estimates; raises guidance
Shoppers just can't stay away from off-price stores.
Ross Stores' earned $317 million, or 82 cents a share, in the quarter ended July 29, up 15% from $282 million, or 71 cents a share, in the year-ago period. Analysts had expected earnings of $0.76 per share.
Sales rose 8% to $3.43 billion. Same-store sales increased 4%.
"We are pleased with the better-than-expected growth we delivered in both sales and earnings in the second quarter, especially given our strong multi-year comparisons and today’s volatile retail climate," said Barbara Rentler, CEO. "Operating margin of 14.9% outperformed our projections, mainly due to a combination of higher merchandise margin and leverage on our above-plan sales gains.”
For the first six months of fiscal 2017, Ross earnings per share were $1.64, up 14% on top of a 9% increase last year. Net earnings were $638 million, up from $573 million in the prior year. Sales rose 7% to $6.73 billion. Same-store sales increased 4%.
The company forecast fourth-quarter same-store sales growth of 1% to 2%, with per-share earnings between 88 cents and 92 cents.
Ross said it now expects fiscal 2017 earnings per share to increase 12% to 14% to $3.16 to $3.23, on top of a 13% gain last year.
Ross Stores operates 1,384 locations in 37 states, the District of Columbia and Guam.