Gap Store Plans Stay Intact

"For fiscal 2006, the company still expects to open about 190 store locations and to close about 125 store locations," with net square footage still expected to increase between 2% and 3% for fiscal 2006, the company said. The discussion of store openings and closings came during a conference call with financial analysts in which Gap reported net earnings of $189 million, or 23 cents per share, for the third quarter. That compares with $212 million, or 24 cents per share, for the same period last year. Quarterly sales remained flat at $3.9 billion on a year-to-year basis and comparable store sales decreased 5% on top of a 7% percent decrease for the same period last year.

Commenting on what he called a solid performance at Banana Republic and continued progress each month of the quarter at Gap, company president and chief executive officer Paul Pressler called Old Navy's results disappointing and said that the overall quarterly results showed that "each brand is at a different stage in its turnaround." The company's growth strategy is to build and expand its brands through new product categories and through international, online and real estate growth, Pressler said. In the third quarter, for example, Banana Republic continued its expansion in Japan, and the first Gap franchise stores opened in Singapore and Malaysia. An additional 10 new Forth & Towne stores opened in the third quarter.

"Although we believe we've made improvements in Old Navy's product and store experience over the past several months, traffic trends unexpectedly deteriorated in October, making it difficult to clear fall product," Pressler said. "As we look at our third quarter performance and November results so far, Old Navy's business continues to be challenging month-to-date, and momentum at Gap brand is slower than expected."