Blog: Leonie BarrieIs the tide turning for Gap?

Leonie Barrie | 24 August 2009

Is the tide finally turning for Gap Inc? The largest US clothing chain last week posted a second-quarter profit that was slightly below last year but still managed to top analysts' expectations. And the retailer now says it plans to make targeted investments to gain back market share.

The results come after two years of cost cutting and expense management at the San Francisco based retailer – although sales worryingly continue to fall in all its divisions. Its best performing unit was Old Navy, but there is still work to be done at the Gap, Banana Republic and international stores.

Old Navy has undoubtedly been helped by a new design team and a new focus on inexpensive, trendy basics. Gap is hoping similar efforts will start to pay off at its namesake chain, where its latest attempt to boost sales is a relaunched upmarket denim line called 1969 Premium Jeans, which features new styling and better fits.

Gap was one of several apparel retailers reporting quarterly earnings last week whose results have been boosted by cost cutting and lower inventory.

The future is also looking bright for apparel firm Perry Ellis, after second-quarter profits beat expectations. Even more encouragingly, a strong second-half order book prompted it to post an optimistic earnings forecast for the year.

The company, whose brands include Laundry, Shelli Segal and C&C California, has seen “positive signs in the consumer environment,” and is buoyed by orders now coming in from retailers for the 2009 holiday and 2010 spring seasons.

New US rules governing the amount of lead in products sold to children – including apparel and footwear – have come into effect under the Consumer Product Safety Improvement Act (CPSIA).

As well as tighter restrictions on lead content, fabric and yarn have now been exempted from the lead testing and certification requirements. However, because the snaps, buttons, zippers found in a garment are not part of this rule, the final article of clothing still needs to be tested.

Another new regulation requires a tracking label to be permanently applied to any product meant for children, detailing the product's production location and date, as well as the manufacturer's name and the product's batch or lot number. 

The upcoming tenth anniversary of the African Growth and Opportunity Act (AGOA) has prompted a new report looking at ways to help textile and apparel firms in beneficiary countries to boost their exports. The Government Accountability Office (GAO) carried out its study because "according to US government officials, sub-Saharan Africa's textile and apparel industry has not achieved the growth anticipated under AGOA."


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