Gap firmly back on track
2003 sales up 10 per cent
February 27 2004
Gap has sent a clear signal that it has lefts its sales problems behind it, forecasting a return to higher margins as it celebrates a strong 2003 performance.
The fashion retailer has seen sales increase month-by-month over the past year as it recovered from a period in which its ranges lost touch with trends and sales declined.
In the year to the end of January, total group sales increased by 10 per cent to $15.9bn. Net profit for the year was $1bn, compared with $477m last year.
The second half of the year saw the launch of new ranges, including corduroy jeans, heavily promoted by music stars Madonna and Missy Elliot. Gap is increasing its 2004 marketing budget by more than $50m to $560m, which will again peak with a major summer TV campaign.
[img r]gap2.jpg[/img]Gap said that better inventory controls are now reducing markdowns in the business, and it expects both its operating margins and gross margins to recover over the next two years. Both have reduced as the company has worked to attract customers back into stores.
Across to the year to the end of January, Gap International which includes the UK stores, grew by 6 per cent compared to a 5 per cent decline in the year before. Gap International net sales were $2bn for the year, compared to $1.7bn last year.
The international arm operates 358 stores from a company total of 3022.
Gap President and CEO Paul Pressler sad: “We achieved strong earnings performance in 2003 by better understanding and serving our customers and improving our operating discipline.
“We also significantly improved our cash flow and lowered our debt, which puts our company in a healthier financial position to further strengthen our brands and to begin funding longer term growth opportunities.”
