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) -- Are shoppers falling back into

The Gap

(GPS) - Get Gap, Inc. Report


After four years of witnessing slumping sales for the company, investors, looking to the second-quarter results due Thursday, sure hope so.

It's not as if the company hasn't engaged in its share of, pardon the pun, stopgap measures: The company has attempted to defensively manage its business by controlling expenses. It has updated merchandise lines and launched aggressive ad campaigns. It has retooled its lower-priced Old Navy chain to target the frugal mom.

In an effort to drive traffic to its more expensive namesake stores,

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Gap has also re-launched its 1969 denim collection

this month, part of an effort to fix the sizing and fitting of its apparel merchandise.

But it is yet to be seen if these efforts will pay off. In July, same-store sales slipped 8%. By division, sales at its namesake stores dropped 9%, while those at its Banana Republic stores declined 7%, and sales at its Old Navy stores fell by 8%.

Despite the sales decline, prudent expense management should curb earnings erosion during the quarter, Stifel Nicolaus analyst Richard Jaffe wrote in a note.

Management expects second-quarter earnings in the range of 30 cents to 32 cents a share, in-line with analysts' estimates. Last year the company earned 32 cents a share on revenue of $3.5 billion.

"While we think that merchandise continues to look better year-over-year, we are concerned that traffic trends will continue to lag merchandise improvements," Needham analyst Christine Chen wrote in a research note. "Thus, we would like to see acceleration in traffic trends, full-price selling or same-store sales before we become more positive on Gap."

Gap typically provides annual guidance, but Chen said it will probably refrain from making a forecast due to the weak environment.

Shares of the specialty retailer closed up 1.5% on Tuesday to $18.52. In mid-afternoon trading Wednesday, the stock was up another 1% to reach $18.70. The company has been trading between $9.41 and $20.80 during the latest 52-week period.

-- Reported by Jeanine Poggi in New York.

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