Gap results 'unacceptable'

Gap, the largest clothing retailer in the US, has posted a drop in third-quarter earnings, caused by unpopular product and deteriorating customer traffic.

The retailer, which owns the Gap, Banana Republic and Old Navy stores, said its earnings for the third quarter ended October 29 fell to US$212 million (£123.3 million) from US$265 million (£154.1 million) for the same period last year.

'Our third-quarter results were unacceptable,' said Gap chief executive Paul Pressler. 'However, the issues we face today are fixable and we are aggressively executing plans to provide more compelling product and exceptional store experiences for our customers.'

Net sales for the third quarter at Gap North America reached US$1.4 billion (£814.3 million) against sales at the international arm of US$324 million (£188.5 million).

During a conference call with analysts, the group said store traffic had particularly deteriorated in the first two weeks of November. Pressler said the group hopes to become 'more trend-right' for spring/summer, especially at Gap and Old Navy.

A Gap spokeswoman admitted that the retailer needs to be more aggressive with buying and the focus must be averted from value product.