Gap offers muted annual outlook

NEW YORK — Gap offered a downbeat annual profit outlook last week after reporting a 43 percent drop in net income for the second quarter, weighed down by moves to close stores.

The San Francisco, California-based retailer, which operates stores under its namesake brand, Banana Republic and Old Navy, is facing the same problems as other fashion retailers as shoppers buy less clothing in general and shop more at offprice chains when they do. But it’s also struggling with its own problems, including sluggish sales.

Gap has been in a cycle of discounting its goods to get shoppers to buy. CEO Art Peck, who took over the helm in 2015, had promised investors that business would turnaround this past spring but that failed to materialize. Peck said in a statement that during the quarter the company took “critical steps” on its restructuring plans and on building a more efficient brand with more growth potential.

“While I remain unsatisfied with the pace of improvement across the business, I am encouraged by the underlying signs of progress,” he said, citing healthier merchandise margins.

Gap said that it now expects earnings per share to be in the range of $1.87 to $1.92 for the year. Analysts had expected $1.95 per share for the year.

The company said net income came to $125 million, or 31 cents per share, in the quarter ended July 30. That compares with $219 million, or 52 cents per share, a year earlier.