Clothing retail chain Gap has reported a net income of $117m in the second quarter (Q2) of fiscal year (FY) 2023 compared to a net loss of $49m a year ago.

Its reported diluted earnings per share for the quarter were $0.32 against a loss per share of $0.13 a year ago.

For the 13 weeks to 29 July 2023, Gap posted net sales of $3.55bn, down 8% from $3.86bn in the same quarter a year ago. Comparable sales during the quarter declined by 6%.

The retailer, which operates 3,456 stores across 40 countries, saw store sales dip 7% compared to last year. Online sales declined 11% from the prior year period.

During the quarter, sales for the Old Navy brand dropped 6% to $1.96bn. Meanwhile, sales for Gap and Banana Republic brands were down 14% and 11,% respectively, compared to the Q2 of last year.

The retailer’s cost of goods sold and occupancy expenses for the quarter declined to $2.21bn from $2.53bn a year ago. Its gross profit increased to $1.33bn over the quarter.

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Gap’s operating expenses during the quarter were $1.23bn versus $1.36bn a year ago. Operating income was $106m against an operating loss of $28m a year ago.

Gap president and CEO Richard Dickson said: “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.”

In the third quarter of FY23, Gap expects net sales to decrease in the low double-digit range compared to last year’s net sales of $4.04bn.

The retailer anticipates full year net sales to decline in the mid-single digit range compared to last year’s net sales of $15.6bn.

Gap executive vice president and chief financial officer Katrina O’Connell said: “As we look toward the long-term, we believe our focus on unlocking the value of our important and iconic brands coupled with the transformative actions we are taking to improve our operating structure will position Gap back on its path towards delivering sustainable, profitable growth and value for our shareholders.”