Apparel chain Gap reported a larger-than-predicted fall in October sales after it once again failed to win back customer favour.

Same-store sales fell 7% during the month compared with a 5% drop last year, although merchandise margins were up from last year, the company said.

On a net basis, sales totalled US$1.25bn, a 3% fall from last year's $1.28bn.

By division, Gap North America same-store sales fell 4% compared to a 3% fall last year, Banana Republic sales rose 2% compared to an 8% fall last year, Old Navy sales plummeted 11% compared to a 6% decrease last year and international sales also dropped by 8% compared to a 9% fall a year ago.

"October was a transitional month as all brands continued fall clearance events and introduced initial holiday flows," said Sabrina Simmons, senior VP, finance of Gap.

"Total company merchandise margins were above last year driven by Gap and Banana Republic.

"We were pleased with customer response to our (Product) Red collection at Gap brand, and with our continued overall progress at Banana Republic."
 
For the 13 weeks ended 28 October, total company net sales were $3.86bn, which is flat compared to previously.

The company's third-quarter comparable store sales decreased 5% compared with a decrease of 7% in the third quarter of the prior year.
 
Gap expects third-quarter earnings per share to be between $0.21 and $0.23.

The company has promised investors will see a turnaround in the second half of the year after ongoing poor results.

The retailer, which has lost favour with its once-devoted customer base, has admitted its recovery will take some time.

Strategies employed to tackle this have included aggressively clearing lines and ramping up marketing and stores spending.