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Retailer Gap Posts Mixed Q2 Results On Weak Consumer Spending

Clothing retailer Gap (GPS) has reported mixed financial results for this year’s second quarter due to sluggish consumer spending and weakening demand.

The San Francisco-based company announced earnings per share (EPS) of $0.34 U.S. versus $0.09 U.S. that was expected on Wall Street.

Revenue in the quarter ended June 30 totaled $3.55 billion U.S. compared to $3.57 billion U.S. that was forecast by analysts. Revenue was down 8% from a year earlier.

Looking ahead, Gap is forecasting net sales to decrease in the low double-digit range for the current third quarter compared to last year’s Q3 sales of $4.04 billion U.S.

Analysts had expected Q3 sales to decline 6.8%, according to Refinitiv data.

Gap’s operations have been under pressure for numerous quarters as it struggles to hang on to market share in a difficult operating environment.

During an earnings call with analysts, Gap executives talked about a “weak environment,” “choppy consumer market” and a consumer that’s “under pressure.”

On a positive note, Gap’s gross margins rose 3.1 percentage points to 37.6% during Q2 of this year due to lower air freight expenses and a slowdown in discounting.

Gap also has a new chief executive officer (CEO) in Richard Dickson, who was previously an executive at toymaker Mattel (MAT).

Gap’s stock has declined 16% this year to trade at $9.53 U.S. per share.

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