Gap has warned that disruption caused by the US West Coast dock strike could severely dent final-quarter earnings.
Despite last month's sales being better than expected, the retailer disclosed that approximately 25 per cent of its winter inventory has been affected by the industrial action.
'The Gap International division solidly exceeded our expectations, while Old Navy and Gap Domestic came in slightly better than expected,' said Bear Stearns retail analyst Dana Telsey. Banana Republic was in line with expectations, she added.
Telsey said that late arrival of stock could force the store group to mark down product.
Although President George Bush ordered dockers back to work for a 'cooling off' period, the dispute may reignite.
Three-quarters of Gap's winter stock has already arrived, been diverted to other ports or had not been shipped when the ports were shut down.
For September, Gap Domestic posted a 3 per cent fall in like-for-likes compared to a fall of 18 per cent in the same period last year. Gap International was boosted by a two-day friends and family promotion in Japan and Canada with a 3 per cent rise in like-for-likes against an 11 per cent fall last year.
Telsey expects Gap to continue to use promotions to drive footfall and sales.