Gap Inc Increases Profits by 25%

Posted on November 20, 2009

GAP Holiday LogoThe Wall Street Journal reports that Gap Inc. managed to increase profits 25% for its quarter ending Octoboer 31st. However, same-store sales for the retail were flat compared to the year before.
Profit at Gap Inc., one of the world's largest apparel retailers by sales, rose 25% to $307 million, or 44 cents per share, for the quarter ended Oct. 31, from $246 million, or 35 cents per share, a year earlier. Sales at stores open at least a year, known as same-store sales, were flat compared to last year.

The company, which also operates Old Navy and Banana Republic, reported that gross margin increased 3.8 percentage points to 42.5%, its highest in a decade. Mr. Murphy said Gap Inc. continues to work with its vendors to squeeze costs out of the supply chain so it can offer more traffic-driving promotions without hurting margins.

Retailers like the Gap are hoping they can manage to increase sales this holiday season but the economy is still very tough for consumers. Many people lost jobs this year or had salaries frozen. Flat same-store sales is actually much better than most retailers have done the past few quarters. Retailers are actually making profit gains from cost cutting earlier in the year.

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