Apparel chains Gap Inc., GPS -1.90%▼ Victoria’s Secret VSCO -3.19%▼ & Co. and Abercrombie & Fitch Co. ANF -9.00%▼ reported declining quarterly sales as consumers shift their spending away from clothing and other discretionary items.The results, following lackluster earnings reports from many department stores and big-box chains, were weaker than investors had expected. Victoria’s Secret and Abercrombie both lowered their sales targets for the year, while Gap withdrew its guidance as its interim chief executive aims to stem losses. In Thursday trading, Victoria’s Secret and Abercrombie & Fitch fell 2% and 6%, respectively. Gap rose 5% in after-hours trade after closing up 1% on Thursday.
This year, retail purchasing has slowed as increasing fuel and food prices squeeze household budgets and individuals save more money for dining out and leisure. Many chains now have extra inventory as the holidays approach, forcing them to reduce prices. Gap lost $49 million during the quarter and reported an 8% drop in sales. Gap announced late Thursday that its second-quarter sales decreased 8%, resulting in a $49 million loss, compared to a $258 million profit a year earlier. controls the brands Gap, Old Navy, Banana Republic, and Athleta.
Sonia Syngal, the CEO of the San Francisco-based corporation, was ousted in July after less than two years in charge. Bob Martin, its executive chairman and a former leader at Walmart Inc., serves as temporary CEO while the company hunts for a permanent replacement. He stated that Gap is focusing on profitability by decreasing operating costs and addressing unproductive inventories. Abercrombie lost money in the three months ending July 30. Victoria’s Secret reported a 6% reduction in quarterly revenue and a more than 50% drop in net income to $69.9 million. It cautioned that full-year sales will fall after earlier forecasting flat or increasing sales. The lingerie retailer, which owns the Pink brand, had hoped that a new branding effort would rekindle interest in the brand.