US clothing chain Gap sees domestic sales fall

Family-controlled fashion retailer Gap Inc has seen a fall in its second-quarter domestic sales, as it struggles with a drop in customers and higher production costs.

The largest American clothing company by revenues, controlled by the founding Fisher family, announced on 18 August that its US revenues for its flagship brand dropped to $734 million (€512 million) in the second fiscal quarter, from $776 million for the same period last year.

But overall sales for the quarter increased by 2% to $3.39 billion, the group said in a statement.

Glenn Murphy, the company’s non-family chairman and chief executive, said: “Despite a difficult quarter, we still delivered a net sales improvement and I continue to believe we have far greater opportunities than challenges ahead of us.”

The San Francisco-based business, whose brands include Old Navy and Banana Republic, saw its profits for the second quarter fall by 19% to $189 million. The group’s fiscal year ends on 31 January.

Much of the fall comes as the group tries to revamp its merchandise, after losing market share to competitors over the last year. It has also been hit by high production costs, which it has not passed on to customers. During the quarter, the company closed 27 of its stores, which included 19 of its Gap brand in North America.

It has been focusing on expanding abroad to offset declining sales in its domestic market. During the quarter, Gap opened its first flagship store in Rome and further expanded its operations in Japan and China. The group also opened new franchise stores in Egypt and Ukraine.

Founded in 1969 by the husband-and-wife team of Don and Doris Fisher, the family controls 32% of the company. Sons Robert and William are on the board of directors.

The group had 2010 fiscal revenues of $14.66 billion.