Gap's profit drops considerably

Gap's profit drops considerably

Fashion group GAP's net profit dropped from 351 million dollars (328 million euro) to 248 million dollars (232 million euro) in the third quarter, which is also why the American clothing group has lowered its full-year forecast.

Gap sales drop 4 %

In trouble for a while, GAP has not been able to turn the tide in the third quarter with its turnover down 3 % to 3.86 billion dollars (3.61 billion euro). Based on the same amount of stores, the drop would only be 2 % and looking at the separate brands, Gap dropped 4 %, Banana Republic plummeted 12 %, but Old Navy stood its ground with a  4 % turnover increase.

 

The expensive dollar was partly to blame, with particularly its Canadian and Japanese activities suffering. 23 % of Gap's third quarter turnover was generated abroad.

 

The company also had to deal with the consequences of several wrong fashion decisions, particularly when it comes to women's fashion. Competitors like H&M, Forever 21 and Zara took full advantage and welcomed plenty of new customers. On top of that, Gap's wholesale margin also dropped from 40.2 % to 37.3 %.

 

In a previous statement, Gap informed it would update its distribution system, choosing to downsize to a smaller and better network. The brand is on sale in 3,300 stores of its own, 400 franchise stores and several online platforms worldwide.

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