Sales Slow AT Gap

Even Sarah Jessica Parker couldn't prevent the slowdown in sales at Gap. The American retail giant reported net sales of USD1.0 billion for the four-week period ended July 31, 2004, which represents a 3 percent decrease compared with net sales of USD1.1 billion for the same period ended August 2, 2003. The company's comparable store sales for July 2004 decreased 5 percent compared with a 9 percent increase in July 2003.

Comparable store sales for July 2004 for Gap International were down 12 percent versus positive 8 percent last year.

"Although sales of summer product at Gap, Banana Republic and Old Navy were strong in May, June's soft traffic trends continued into July, making summer clearance results disappointing overall," said Sabrina Simmons, Senior Vice President, Treasury and Investor Relations. "Due to markdowns needed to clear summer product, total company merchandise margins in July were slightly below last year. However, we expect to report a solid year-over-year gain in merchandise margins for the second quarter."

The company announced that its expected earnings per share for the second quarter reflects about USD0.04, or about USD65 million, of expenses related to premiums paid on early retirement of about USD300 million of funded debt. This USD65 million will be included in operating expenses for the second quarter. Reflecting these charges, the company expects second quarter reported earnings per share to be USD0.19 to USD0.21.

The company reiterated that it expects inventory per square foot at the end of the second quarter to be down on a percentage point basis in the low single digits.

As of July 31, 2004, Gap Inc. operated 2,999 store locations compared with 3,095 store locations last year. Gap Inc. will announce its second quarter earnings results via press release on August 19, 2004.