Gap Inc.'s fiscal second quarter profits fell 43%, dragged down by costs related to store closings and the restructuring of its business.
The beleaguered San Francisco-based chain also reported comparable sales declines at its three top brands, including at Old Navy, once a bright spot.
The downbeat performance announced Thursday comes six months after the retailer said it was creating two independent publicly traded companies — low-priced Old Navy and a yet-to-be named company that will hold the iconic Gap brand and Banana Republic, as well as the lesser known names Athleta, Intermix and Hill City.
FILE - This Aug. 31, 2017, file photo shows a sign for a Gap store in Pittsburgh. The Gap Inc. reports financial results Thursday, Aug. 22. (AP PhotoGene J. Puskar, File)
Gap Inc. has said the spin-off will enable each of the two companies to focus on flexibility and pare down costs.
"We are operating in a challenging environment, but I remain confident in the strength of our brands and our plans for the future as we work to launch two independent, public companies," said Art Peck, the company's president and chief executive officer.
Like many mall-based clothing chains, Gap is struggling to turn itself around as shoppers go online or to discounters like T.J. Maxx for their clothing. But Gap, which defined casual dressing in the 1990s, has also long struggled with its own deep-rooted problems — its offerings have failed stand out from that of its rivals.
The chain has been promising investors that a turnaround is in the making. Instead, it keeps having to discount its merchandise to get customers into its stores. Now, it's turning to new ways to grab customers. Earlier this month, its Banana Republic division, following other clothing competitors, announced it was launching an online subscription service.
But the latest results show Gap has a long way to go.
"Gap is a company in retreat," said Neil Saunders, managing director at GlobalData Retail. "Its profits and sales are in decline and it doesn't seem to have many credible plans to reverse that position."
Gap reported net income of $168 million, or 44 cents per share. Earnings, adjusted for pretax expenses and non-recurring costs, were 63 cents per share.
The results surpassed Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for adjusted earnings of 52 cents per share. That compares with $297 million, or 76 cents per share, in the year-ago period.
The clothing chain posted revenue of $4.01 billion in the period, down from $4.09 billion in the year-ago period. Eight analysts surveyed by Zacks expected $4.02 billion in the latest period.
Gap said that overall global sales at stores opened at least a year fell 4% during the quarter. By brand, Gap's sales at stores opened at least a year fell 7%, while Banana Republic's comparable sales were down 3%. Old Navy posted a 5% decline in comparable sales.
Gap affirmed its full-year earnings in the range of $2.05 to $2.15 per share. Gap says it still expects comparable sales to be down low-single digits for the current fiscal year.
Gap shares have decreased 31% since the beginning of the year, while the Standard & Poor's 500 index has risen 17%.
The shares fell 17 cents to $17.58 in after-hours trading, after rising nearly 5%, or 79 cents, to $17.75 in regular-session trading Thursday.
This story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on GPS at https://www.zacks.com/ap/GPS
VENICE, Italy (AP) — Under the gaze of the world’s media, the fragile lagoon city of Venice launches a pilot program Thursday to charge day-trippers a 5-euro (around $5.35) entry fee that authorities hope will discourage visitors from arriving on peak days and make the city more livable for its dwindling residents.
Signs advising arriving visitors of the new requirement for a test phase of 29 days through July have been erected outside the main train station and other points of arrival.
Some 200 stewards have been trained to politely walk anyone unaware of the fee through the process of downloading a QR code. A kiosk has been set up for those not equipped with a smartphone. Once past designated entry ports, officials will carry out random checks for QR codes that show the day-tripper tax has been paid or that the bearer is exempt.
Transgressors face fines 50 euros to 300 euros. The requirement applies only for people arriving between 8:30 a.m. and 4 p.m. Outside of those hours, access is free.
“We need to find a new balance between the tourists and residents,’’ said the city’s top tourism official, Simone Venturini. “We need to safeguard the spaces of the residents, of course, and we need to discourage the arrival of day-trippers on some particular days.”
Venice has long suffered under the pressure of over-tourism, but officials say that pre-pandemic estimates ranging from 25 million to 30 million visitors a year — including day-trippers — are not reliable and that the pilot project also aims to come up with more exact figures to help better manage the phenomenon.
By contrast, registered visitors spending the night last year numbered 4.6 million, according to city figures, down 16% from pre-pandemic highs.
Venturini said the city is strained when the number of day-trippers reaches 30,000 to 40,000. Its narrow alleyways are clogged with people and water taxis packed, making it difficult for residents to go about their business.
Not all residents, however, are persuaded of the efficacy of the new system in dissuading mass tourism, and say more attention needs to be paid to boosting the resident population and services they need.
Venice last year passed a telling milestone when the number of tourist beds exceeded for the first time the number of official residents, which is now below 50,000 in the historic center with its picturesque canals.
“Putting a ticket to enter a city will not decrease not even by one single unit the number of visitors that are coming,’’ said Tommaso Cacciari, an activist who organized a protest Thursday against the measure.
“You pay a ticket to take the metro, to go to a museum, an amusement park; you don’t pay a ticket to enter a city. This is the last symbolic step of a project of an idea of this municipal administration to kick residents out of Venice,” he said.
Venturini said about 6,000 people had already paid to download the QR code, and officials expect paid day-tripper arrivals Thursday to reach some 10,000.
More than 70,000 others have downloaded a QR code denoting an exemption, including to work in Venice or as a resident of the Veneto region. People staying in hotels in Venice, including in mainland districts like Marghera or Mestre, should also get a QR code attesting to their stay, which includes a hotel tax.
The tourist official says interest in Venice's pilot program has been keen from other places suffering from mass tourism, including other Italian art cities and cities abroad such as Barcelona and Amsterdam.
Tourists take pictures at the St. Mark square in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Tourists ride on a ferry boat in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
People stand in front of an information board explaining how to pay the tourist tax in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Marco Bettini, director of Venis Informatics System, gestures as he talks to reporters at the police Venice control room, in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Venice councillor Simone Venturini speaks with reporters in front of a tourist tax totem in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Workers prepare banner explaining how to pay the tourist tax in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Marco Bettini, director of Venis Informatics System, gestures as he explains the Venice density to reporters at the police Venice control room in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Tourists arrive at the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Workers prepare the tourist tax cashier desks outside the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Porters wait for tourists outside the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Workers prepare the tourist tax cashier desks outside the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Workers prepare the tourist tax cashier desks outside the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Porters wait for tourists outside the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Tourists arrive outside the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Tourist information boards are seen outside the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
Tourists arrive outside the main train station in Venice, Italy, Wednesday, April 24, 2024. The lagoon city of Venice begins a pilot program Thursday, April 25, 2024 to charge daytrippers a 5 euro entry fee that authorities hope will discourage tourists from arriving on peak days. Officials expect some 10,000 people will pay the fee to access the city on the first day, downloading a QR code to prove their payment. (AP Photo/Luca Bruno)
