(Adds results from other retailers)

 
    DOW JONES NEWSWIRES 
 

Casual clothing retailer Gap Inc. (GPS) posted on Thursday a 0.4% drop in profit in the second quarter, narrowly beating expectations even as it posted lower sales across all four of its divisions.

The San Francisco retailer, which is working through a turnaround, has focused on maintaining leaner inventory, as well as traffic-driving promotions. In an effort to reinvigorate a brand that has lost ground to trendier rivals, the Gap launched a premium denim line earlier this month to compete with pricier lines like True Religion and 7 for All Mankind.

The Gap's tepid results came on the same day that competitors Buckle Inc. (BKE) and Aeropostale Inc. (ARO) posted strong earnings, underscoring the appeal some flashier brands have with younger consumers.

For the quarter ended Aug. 1, Gap reported earnings of $228 million, or 33 cents a share, down from $229 million, or 32 cents a share, a year earlier. Earlier this month, the company projected per-share earnings of 30 cents to 32 cents, above analysts' estimates at the time.

The Gap had earlier reported net sales declined 7.4% to $3.24 billion as same-store sales dropped 8%. Same-store sales continued to fall across all of its divisions. The higher-end Banana Republic brand posted a 15% same-store sales decline - the largest of a Gap brand - while the flagship Gap and Old Navy brands were off 10% and 4%, respectively. International sales dropped 5%.

Still, the results at Old Navy were an improvement from a year ago, when same-store sales slumped 16%. Online sales improved 17% to $224 million.

Gross margin grew to 39.7% from 38.2%.

Shares rose 1.5% to $19.14 in after-hours trading. The stock has been rebounding recently, and is up by over a third this year.

Gap was one of a handful of clothiers reporting earnings. Teen retailer Buckle said fiscal second-quarter profit rose 12% on continued revenue and margin growth, though sales momentum is slowing.

Buckle's trendy tops and edgy jeans, as well as its footwear, have so far helped it ride out the recession. Second-quarter earnings came to $25 million, or 54 cents a share, beating analysts' per-share expectations by two cents. Still, the company's 22 straight months of double-digit same-store sales growth ended in June.

Aeropostale Inc.'s (ARO) fiscal second-quarter profit jumped 82% as the teen-apparel retailer reported higher same-store sales. Aeropostale has easily outperformed more expensive mall retailers. The company has reported double-digit increases in its same-store sales in all but two months this year, and last posted a decline in November. For the quarter ended Aug. 1, Aeropostale reported earnings of $38.6 million, or 57 cents a share, up from $21.1 million, or 31 cents a share, a year earlier.

Also on Thursday, fellow teen retailer Wet Seal Inc. (WTSLA) reported a 69% fall in profit, while Pacific Sunwear of California Inc. (PSUN) and Zumiez Inc. (ZUMZ) both swung to second-quarter losses on lower same-store sales.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com

(Ben Charny contributed to this report.)