Gap Q2 net sales up 6 percent

Gap reported that net sales for the second quarter of 2012 increased 6 percent to 3.58 billion dollars compared with 3.39 billion dollars for the second quarter last year. Comparable sales increased 4 percent. Net income for the second quarter was 243 million dollars, up 29 percent compared with the second quarter last year. Second quarter diluted earnings per share increased 40 percent to 0.49 dollars compared with 0.35 dollars last year.

“Customers responded well to our product offerings across our brands, driving a healthy increase in sales and earnings per share during the quarter,” said Glenn Murphy, chairman and chief executive officer of Gap. “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.”

Given second quarter performance, the company has raised its estimate for fiscal year 2012 diluted earnings per share to be in the range of 1.95 dollars to 2 dollars, compared with 1.56 dollars in fiscal year 2011.

In North America, Gap, Banana Republic, and Old Navy each delivered positive comparable sales for the second consecutive quarter. Total net sales for the Gap Inc. direct division increased 24 percent to 384 million dollars compared with 309 million dollars last year. Net sales outside of the U.S. and Canada (including Gap Inc. direct and franchise) increased 7 percent; the company opened its first Old Navy store outside of North America, in Tokyo, and continued to expand its Gap brand store base in China. Franchise net sales increased 25 percent compared with last year and the company opened its 250th franchise store. The San Francisco-based company opened 11 Athleta stores, doubling its fleet to 22 stores across North America.

The company’s second quarter comparable sales were up 4 percent compared with the second quarter last year. Comparable sales for the second quarter of fiscal year 2012 in North America were a positive 7 percent versus a negative 3 percent last year. Banana Republic North America was also a positive 7 percent versus a negative 2 percent last year. The same was with Old Navy North America reporting a positive 3 percent versus flat last year. But internationally it was a negative 5 percent versus a negative 4 percent last year.

U.S. includes the United States and Puerto Rico. In this quarter online sales shipped from distribution centers located outside the U.S. were 30 million dollars (21 dollars million for Canada and 9 million dollars for Europe) and 24 million dollars (16 million dollars for Canada and 8 million dollars for Europe) for the thirteen weeks ended July 28, 2012, and July 30, 2011, respectively.

Franchise sales were 80 million dollars (70 million dollars for Gap and 10 million dollars for Banana Republic) and 64 million dollars (55 million dollars for Gap and 9 million dollars for Banana Republic) for the thirteen weeks ended July 28, 2012, and July 30, 2011, respectively. Net sales outside of the U.S. and Canada (including direct and franchise) were 551 million dollars and 515 million dollars for the thirteen weeks ended July 28, 2012, and July 30, 2011, respectively.

The company ended the second quarter of fiscal year 2012 with a total of 3,285 store locations in 42 countries, 3,035 of which were company-operated. During the second quarter of fiscal year 2012, the company opened 29 and closed 20 company-operated store locations. Square footage of company-operated stores was 36.8 million at the end of the second quarter, a decrease of 2 percent from 37.7 million at the end of the second quarter of fiscal year 2011. This decrease reflects Gap Inc.’s strategy to optimize square footage in North America.