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SAN FRANCISCO – US fashion retailer Gap has posted its latest financial results. In a trading statement, the company said third quarter net sales of US4.04bn were up 2 per cent compared to the corresponding period last year. The company’s net income was US$282m and adjusted net income was US$260m.

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“We have sharpened our focus on execution to optimise profitability and cash flow, are bringing more rigour to our operations, and balancing our assortments in response to what our customers are telling us,” said Bob Martin, executive chairman and interim CEO, Gap Inc.

“While our efforts show early signs of improvement, we are clear that there is work to be done to deliver what our customers, employees and shareholders expect from Gap Inc.”

Gap’s online sales increased 5 per cent and these now represent 39 per cent of total net sales. Meanwhile, physical store sales increased 1 per cent compared to last year, illustrating that the shift to online shopping continues apace in the fashion sector.

Gap says it now has 3,380 store locations in over 40 countries, of which 2,743 are company operated.

Gap says its gross margin was 37.4 per cent while its adjusted gross margin, excluding US$53m in impairment charges related to Yeezy Gap, was 38.7 per cent.

Operating income was US$ and reported operating margin was 4.6 per cent. Adjusted operating income was US$156m dollars and adjusted operating margin was 3.9 percent.

Old Navy net sales of US$2.1bn were up 2 per cent compared to last year driven by improved size and assortment balance and product acceptance offset by softness in the kids and baby category and demand from the lower-income consumer. Comparable sales were down 1 percent.

Gap net sales of US$1.04bn dollars were flat compared to last year driven by improvement in category mix balance and assortment balance offset by softness in the kids and baby category. Global comparable sales were up 4 per cent, while North America comparable sales were flat.

Net sales at Banana Republic of US$517m dollars were up 8 per cent and comparable sales were up 10 per cent.

Athleta net sales of US$340m dollars were up 6 per cent compared to last year. The company said, while the brand continues to make progress in driving awareness and establishing authority in the women’s active and wellness category, it continued to experience softness related to the shift in consumer preference from athleisure to occasion and work-based categories consistent with the broader athleisure market. The brand’s comparable sales were flat.

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