Gap makes profit despite falling sales

The Gap returns to basics

The clothing retailer Gap has said it made a profit over the last three months, despite a sharp fall in sales.

Our assortments are becoming cleaner and more focused, and the overall store environments are starting to feel more consistent and brand appropriate

Millard Drexler
Gap president and chief executive

Overall sales during the three months to May fell 9% to $2.9bn (£19.9bn) from $3.2bn a year earlier.

And sales at shops that had been open for at least a year fell by 17%.

Despite the drop in sales, the company made a profit of $37m, although this was well down on the profit of $115m it made during the same period last year.

But the latest figures marked Gap's first quarterly profit in nine months.

The company said that cost cutting and a shorter shelf life for its products had helped it to return to the black.

Classic collection

The company, which owns the Banana Republic and Old Navy chains in addition to the Gap shops, said last week that sales had fallen for the 25th month in a row in shops that had been open for at least a year.

Analysts said the falling sales reflected customers dislike of the group's efforts to become more trendy.

The Gap has decided to return to basics and this summer will concentrate on selling its traditional denims, khakis and white shirts.

"Our assortments are becoming cleaner and more focused, and the overall store environments are starting to feel more consistent and brand appropriate," said president and chief executive Millard Drexler.

"Moving forward, customers will more clearly see and feel that Gap, Old Navy and Banana Republic are getting back to what they expect and what we've always stood for".

Some analysts have predicted that this should end the slide in sales.

But others have been critical of Gap's continuing expansion efforts.