Gap chief executive Glenn Murphy has given himself five months to stop years of bleeding at the eponymous brand.

The clothing retailer has struggled in its domestic market in recent years. Like-for-like store sales for the last quarter for Gap North America showed a drop of 3%. Although this division accounts for only a quarter of the company’s revenue, the retailer says it needs it in good shape to support its expansion overseas.

Gap’s international business, however, is proving to be more of a success. It plans to open a further 10 stores in China this year. It will take its outlet concept to Italy this year and to China in 2012. This is in addition to the first store in the Ukraine, which will be opened in Kiev in June, and a Serbian Gap in Belgrade later this year.

Gap reported a 1% decrease in net sales to $3.3bn (£2bn) for the first quarter ended April 30. Net income dropped 23% to $233m (£143.7m).

The retailer does not expect that it will achieve a turnaround this year, having admitted that its business performance will be heavily impacted by pressure from sourcing cost inflation.

In attempting to revive the brand, Murphy has tried to cut down long lead times from suppliers in order to be up-to-date on trends. The company has set up a new production fast lane, which has reduced turnaround time to less than four months for some key items.

In addition, the retailer fired its creative director at the beginning of May. It later admitted it has to take a fresh approach if it is to continue Gap’s fashion relevance.

In terms of its marketing strategy, Gap is seeking to strengthen its relationship with Facebook, Groupon, Foursquare, Visa and others to communicate its brand, because of the increasing influence on shopping habits of mobile and social channels.

As a mid-market retailer, Gap is facing stiff competition from rivals including Abercrombie & Fitch. Consumers are either heading to the cheaper apparel retailers, or buying from more upmarket brands for investment pieces.

Gap’s success will depend on getting its merchandising right for a defined consumer. It has to avoid attempts to cater for all demographics like others, such as Marks & Spencer, have tried and failed to do in the past.

Louise Howarth, associate analyst, Planet Retail.

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