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Thursday, 11 October, 2001, 15:09 GMT 16:09 UK
Gap sales slump
Gap shorts advert
The US clothing chain Gap has become the latest company to say it suffered from the drop in consumer confidence following the terrorist attacks last month.

The group said sales fell 17% in comparable stores in September against the same month last year.

But the world's largest retailer Wal-Mart has reported a bigger than expected rise in sales for the same period.

Analysts say discount retailers have done better in recent weeks as consumers are cutting back on luxury items and concentrating on the basics.

Gap heads for loss

As well as reporting the sharp drop in sales, Gap warned it was heading for a third quarter operating loss of between $140m and $150m.

Wal-Mart store
Wal-Mart has benefitted from shoppers concentrating on basic items

Sales at the company - which includes the Gap, Old Navy and Banana Republic stores - had been falling ahead of the 11 September attacks.

"September results significantly missed our expectations, primarily because of Gap and Old Navy," the company's chief financial officer Heidi Kunz said in a statement.

"About half of our total sales shortfall came in week two of the month, following the tragic events of September 11."

The company went on to say it did not see an improvement in October's sales figures, and that it was "very cautious" about future prospects given the present economic uncertainty.

Wal-Mart's better news

There was better news from the world's largest retailer Wal-Mart.

It said sales in September had risen 6.3% compared with last year, which was better than its forecast of 4-6%.

"The best-performing companies are those that have a strong value message," said Mark Miller, a retail analyst at William Blair & Co.

"They are doing well in the tighter economic period because consumers are looking to stretch the greenback that much further."

The BBC's Patrick O'Connell
"Consumers have changed their habits"
See also:

09 Oct 01 | Business
Survey says Americans fearful
13 Sep 01 | Business
Will US consumer confidence fade?
06 Sep 01 | Business
Gap warns on profits
22 Jun 01 | Business
Gap scales back
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