Gap banks on international expansion

Gap said its fiscal second-quarter net income came in at $234 million, or 36 cents a share. That compares with net income of $228 million, or 33 cents a share, in the year-earlier period. Net sales rose 2% to $3.32 billion in the quarter.

Gap was expected to make a profit of 35 cents a share, according to a FactSet Research survey of analysts. Revenue was estimated at $3.32 billion.

The company also announced a new $750 million stock-repurchase plan. The retailer ended the second quarter of its 2010 fiscal year with $150 million remaining under a $1 billion share-repurchase program from February.

"Our economic model helped us deliver both sales and earnings growth for the second quarter, while we navigated some challenges along the way," Glenn Murphy, chief executive of Gap, said in a statement. "Looking forward, we're committed to our strategy of growing sales and market share in North America as we also invest in our long-term global and online growth initiatives."

Many retailers are struggling to boost sales in an economic recovery that's lacking a strong rebound in consumer spending.

Gap said fiscal second-quarter comparable-store sales rose 1%. That was an improvement from an 8% drop during the same period a year earlier. But it's still lackluster growth. Gap North America saw comparable-store sales fall 4% in the latest quarter.

The company is trying to tackle the problem by expanding overseas and on the Internet.

In its fiscal second quarter, Gap said it expanded its online business from one country to 55 through international shipping, making its Old Navy brand of clothes available for the first time to customers outside North America.

The company is also launching dedicated websites in Canada and the U.K. in August.

By the end of 2010, Gap said it expects to have stores in China, Italy and Australia, which combined with its expanding online and franchise operations, will reach customers in about 80 countries.

Gap said online sales jumped 15% to $258 million during its latest fiscal quarter.

Gap stuck to its full-year profit forecast of $1.77 to $1.82 a share. The company said it continues to expect an operating-profit margin of about 13% this year.