Gap´s quarter 23% profit fall

Friday, 20 May 2011

In the UK, retail sales excluding petrol rose by 1.2 per cent month-on-month in April, according to the latest data from the Office for National Statistics (ONS), but industry experts suggest the high street is some way from being healthy.

The ONS figures indicate that year-on-year sales volumes were up 2.7 per cent, with grocery and fashion retailers performing well during an unseasonably warm month full of bank holidays and the royal wedding of Prince William and Kate Middleton.

Turbulent waters for Gap, which just reported  a profit fall of 23% to $233 million for the first months of the year ending April 30th, or 40 cents a share, from $302 million, or 45 cents, in the year-earlier period, the company said Thursday.

"We are disappointed in our quarterly performance, however remain invigorated by the opportunities ahead," Chief Executive Glenn Murphy said in a statement. "We're focused on making the necessary adjustments across the business to deliver the kind of sales we should expect from our brands." Sales at stores open at least a year, known as comparable-store sales, were down 3%; that included a 2-percentage-point boost from the inclusion of comparable online sales. Total sales fell 1% to $3.3 billion. Gap reported its earnings after the markets closed. During regular trading, its stock rose 21 cents to $23.29. In after-hours trading, shares fell as much as 13%.

"There is some fashion in the stores, but the overall look and feel is relatively basic," said Howard Tubin, a retail analyst at RBC Capital Markets to Los Angeles Times. "I don't think the merchandise assortment has stood out from the crowd."

As oppose to Gap, specialty retailer Cato Corp. reported Thursday a 22 percent year-over-year increase in profit for the first quarter, despite lower margins, boosted by lower expenses and revenue growth. The company also provided earnings forecast for the second quarter and raised its earnings guidance for the full-year 2011.

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