Blog: Leonie BarrieGap trims back

Leonie Barrie | 29 February 2008

A continued emphasis on controlling costs and improving margins has helped Gap Inc to a 21% jump in fourth quarter profit, with the retailer promising to be even more thrifty in 2008 to cope with “volatile” economic conditions. Capital expenditures this year will be down 27% to $500m, it said.

Among the measures being planned are fewer new stores (down to 100 shops worldwide compared with 214 last year) and reductions to the size of many existing outlets, as well as cuts to its advertising budget.

But CEO Glenn Murphy understands that growth in gross margin dollars is not enough, and that until the retailer can start growing its sales it will not truly have turned the corner. Significantly, same-store sales – a key measure of a merchant’s health – fell by 5% at both Gap North America and Old Navy North America – the retailer’s two biggest chains.
However, to be fair to Murphy, who took the helm of the company in July, he is also trying to rectify a lot of problems inherited from previous management. He is working to simplify what he described as a “very complicated and bureaucratic culture” at Gap, and to put right past fashion missteps at the company which have sent core shoppers running to rivals in recent years.

Cost-cutting helps Gap to 21% hike in Q4 profit


Ethiopia unrest a sourcing risk?

Fashion retailer H&M and UK based glove and leather manufacturer Pittards both say they are monitoring the situation in Ethiopia closely after the country's government declared a state of emergency af...


Asia facing up to increased competition

Increasing competition for garment sourcing contracts is seeing China not only being challenged by other countries in Asia, but by sub-Saharan African and even Russian suppliers too. And it is pushing...


Cambodia raises garment worker wages

The monthly minimum wage for workers in Cambodia's textile, garment and footwear sector is set to rise to $153 from January next year, following a vote on the issue last week. The increase marks a ris...


Sportswear initiatives start to take shape

The results of two highly-anticipated initiatives in the sportswear sphere were revealed last week: the launch of Under Armour’s new UAS lifestyle brand and the first pair of running shoes created at ...

just-style homepage

Forgot your password?