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Gap is smarter at £126 million
23.05.08
Long-suffering investors at clothing retailer Gap are at last seeing signs that the turnaround plan is working, with the company reporting a 40% jump in first-quarter profit despite worsening conditions.
Chief executive Glenn Murphy said he saw "no signs of improvement in the psyche of the American consumer", but shoppers were responding well to its revamped Gap clothing line.
Net income for the quarter totalled $249 million (£125.7 million), up from $178 million a year ago.
Much of the gain was due to cost-cutting and a curb on price reductions. Sales at the San Francisco-based retailer, which also operates the more upmarket Banana Republic chain and the struggling Old Navy brand, dropped almost 5% to $3.38 billion.
The company said another 15 stores, mostly within the Gap brand, would close during the year.
Gap says that its focus this year will be on driving profit-margin growth, rather than focusing purely on sales growth, in order to stabilise the business.
