The company's store sales decreased by 7 per cent, and online sales decreased by 11 per cent, representing 33 per cent of total net sales. However, the gross margin increased to 37.6 per cent, up 310 basis points from last year. This increase was attributed to factors such as lower air freight expenses and improved promotional activity, partially offset by inflationary cost headwinds, the company said in a press release.

Reported operating income was $106 million, with an operating margin of 3 per cent, while adjusted operating income was $119 million, with an adjusted operating margin of 3.4 per cent. Gap Inc ended the quarter with cash and cash equivalents of $1.4 billion, marking an increase of 91 per cent from the prior year. The company's inventory was down 29 per cent compared to last year, and it paid a second-quarter dividend of $0.15 per share.

Across the company's various brands, Old Navy's net sales were down 6 per cent at $1.96 billion, Gap's sales declined 14 per cent to $755 million, Banana Republic's net sales were down 11 per cent at $480 million, and Athleta's sales were down just 1 per cent at $341 million. These mixed performances reflect ongoing challenges such as foreign exchange headwinds, changes in consumer preferences, and inflationary pressures. The company's leadership expressed ongoing commitment to improving margins and focusing on strategic growth across its brand portfolio.

"I have long admired Gap Inc as a customer, a brand builder, and most recently, as a board member. An even greater draw is the company's storied brands. And I'm excited for the opportunity to lead the incredible people of Gap Inc to unlock our full potential," said Richard Dickson, president and chief executive officer, Gap Inc. "We're seeing encouraging signs of progress, as our teams streamline the way we work so we can focus on growth-driving initiatives – a virtuous cycle that we'll look to become our norm. This means we have to do things differently, with a clear focus on redefining our brands' meaning to consumers, focusing on creativity, designing for relevance as a pursuit rather than a goal, and leveraging our remarkable legacy to shape an exciting new future."

Fibre2Fashion News Desk (KD)