Blog: Mind the Gap
Leonie Barrie | 1 September 2006
“Challenging” and “disappointing” are words becoming all-too-familiar at Gap Inc. While the retailer continues to talk of a turnaround, initiatives such as its new store layout and changes to its product lines come and go without seeming to make a dent in its sluggish sales.
Last month we heard how the retailer had focused on clearing merchandise – with price cuts inevitably eating into profits – to make way for the new autumn clothing lines that arrived in stores in late July. Then in August, when consumers were expected to have been loading up on the new lines, Gap’s same-store sales fell by a further 7%, a much worse decrease than the 3.4% drop analysts had expected.
Alarmingly, the declines came in a month of strong sales for skinny jeans and back-to-school fashions – which should be the backbone of Gap’s business – at competitors such as American Eagle Outfitters, Aeropostale and Abercrombie & Fitch.
Whether or not its newly revamped stores and ranges will spur financial improvements in the second half of the year remains to be seen, but surely patience among analysts and investors must be wearing pretty thin by now?
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