Gap reported second quarter diluted earnings per share of 67 cents, while adjusted earnings per share were 70 cents. The company raised its full year reported diluted earnings per share guidance to be in the range of 1.90 dollars to 2.05 dollars and 2.10 dollars to 2.25 dollars on an adjusted basis.
The company’s net sales of 4.2 billion dollars were up 5 percent compared to 2019.
“Our talented teams delivered our highest second quarter net sales in over a decade. Our strategy is driving growth as evidenced by continued strength at Old Navy and Athleta, Gap Brand’s second consecutive quarter of positive 2-year comparable sales in North America, and momentum gaining at Banana Republic,” said Sonia Syngal, CEO, Gap Inc.
Gap comparable sales increase 3 percent
The company said, strategic permanent store closures and the recent divestitures of the Janie & Jack and Intermix businesses reduced net sales by approximately 8 percent versus 2019. In addition, the company estimates that Covid-related closures in markets outside of the U.S. resulted in approximately 2 percent of sales decline versus 2019.
Comparable sales were up 3 percent year-over-year, and up 12 percent versus 2019. By brand Old Navy Global net sales were up 21 percent versus 2019, , while comparable sales were flat to last year and up 18 percent versus 2019.
Gap Global net sales declined 10 percent versus 2019, with permanent store closures resulting in an estimated 14 percent sales decline, and international Covid-closures driving a 1 percent decline on a 2-year basis. Global comparable sales declined 5 percent and increased 3 percent versus 2019. In North America, comparable sales growth of 12 percent on a 2-year basis was led by strength in key categories, including sleep, active and fleece.
Net sales at Banana Republic Global declined 15 percent versus 2019, with permanent store closures resulting in an estimated 10 percent sales decline, and international Covid-closures driving an estimated 1 percent decline on a 2-year basis. Comparable sales were up 41 percent and down 5 percent versus 2019.
Athleta net sales were up 35 percent versus 2019. Comparable sales grew 13 percent year-over-year and 27 percent versus 2019.
Gap Inc. second quarter online sales grew 65 percent versus the second quarter of 2019 and represented 33 percent of the total business. Store sales declined 11 percent versus the second quarter of 2019.
In the second quarter, the company paid a dividend of 12 cents per share.
Gap raises full year outlook
The company raised its reported full-year diluted earnings per share guidance to be in the range of 1.90 dollars to 2.05 dollars. On an adjusted basis, earnings are expected to be in the range of 2.10 dollars to 2.25 dollars.
The company now expects net sales growth for fiscal year 2021 to be about 30 percent versus 2020. This outlook reflects lost revenue related to the company’s decision to change its European operating model, as well as the completed divestitures of its Janie & Jack and Intermix businesses.
Reported operating margin is expected to be approximately 7 percent and adjusted operating margin guidance has been increased to about 7.5 percent.
The company continues to expect to open about 30-40 Old Navy and 20-30 Athleta stores in 2021, as well as close approximately 75 Gap and Banana Republic stores in North America.