Specialty retailer Gap Inc today (8 October) posted a 1% drop in same-store sales for September, but was encouraged by rising demand at its Old Navy stores and higher margins.

Net sales for the five weeks to 3 October also fell 1%, dropping to $1.33bn from $1.34bn a year earlier.

By division, same-store sales were down 8% at Gap North America, fell 12% at Banana Republic North America, but climbed 13% at Old Navy North America. International comps slipped 4%.

"We're pleased that Old Navy's value message continues to resonate with customers and that we delivered total company merchandise margins significantly above last year," said Sabrina Simmons, chief financial officer for Gap Inc.