Gap Declines

The Gap Inc. (San Francisco) announced that net earnings fell 37 percent for the second quarter ending Aug. 3, 2002. Net sales increased 1 percent, but same-store sales decreased 7 percent. (In this quarter a year ago, same-store sales fell 9 percent.)

“Although our business is currently pressured by continued negative traffic trends, we believe we've achieved much of what we set out to do strategically in the first half of the year,” said Gap's outgoing president and ceo Millard Drexler. “The foundation is in place for ongoing improvement at each of our brands.”

As for those brands, same-store sales were down 13 percent for Gap's U.S. operations; down 12 percent for Gap Intl.; down 5 percent for Banana Republic; and down 1 percent for Old Navy. (Old Navy's performance was a considerable improvement over last year, when its same-store sales declined 14 percent in the second quarter.)

“So far this month, we have not seen an improvement in the traffic trends that we and other retailers began seeing in the second half of July,” said cfo Heidi Kunz. “The retail environment also continues to be very promotional. As a result, our beginning-of-month sales are somewhat short of projections. But each brand is responding aggressively in the second half of the month with strategic promotional events and marketing to drive more business.”