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Aug 21 Apparel retailer Gap Inc raised
its full-year profit forecast, encouraged by strong sales of its
lower-priced Old Navy clothes, and said it would open 40 stores
in India as part of its strategy to expand in emerging markets.
Gap has been looking to reduce its dependence on the North
American market, which generates more than three-quarters of its
Sales of its other key brands - Gap and Banana Republic -
have cooled in the region as shoppers cut down on discretionary
Sales in Asia accounted for only 9 percent of Gap's total
revenue of $16.1 billion in the year ended February 2014, but
are growing fast. The company said in April it expected sales in
China to triple in the next three years to $1 billion.
"India is an emerging, vibrant market and an important next
step in our global expansion strategy," said Steve Sunnucks,
Global President of Gap.
Gap said it is partnering with Arvind Lifestyle Brand Ltd, a
unit of textile manufacturer Arvind Ltd, for opening
the stores in India. The first stores will open in Mumbai and
The company, which currently has 231 Gap stores in Asia, is
also aiming to open 110 Gap stores in mainland China, Hong Kong
and Taiwan this year.
Gap raised its full-year profit forecast to $2.95-$3.00 per
share for the year ending February 2015. It had previously
forecast $2.90-$2.95 per share.
Analysts on average expected the company to earn $2.95 per
share for the year, according to Thomson Reuters I/B/E/S.
Comparable sales at Old Navy stores rose 4 percent in the
second quarter ended Aug. 2. Sales of Gap and Banana Republic
clothing were disappointing. Comparable store sales fell 5
percent at Gap and were flat at Banana Republic.
Many large U.S. retailers have reported disappointing
quarterly sales at their established stores, pointing to a
cutback in spending on discretionary items.
Aeropostale Inc on Thursday reported a 13 percent
fall in second-quarter comparable sales, while American Apparel
Inc said on Monday quarterly same-store sales declined 6
Gap's net profit rose to $332 million, or 75 cents per
share, in the second quarter, from $303 million, or 64 cents per
share a year ago.
Excluding items, the company earned 70 cents per share.
Revenue rose 3 percent to $3.98 billion. Comparable sales
were flat versus a 5 percent increase a year earlier.
Analysts on average expected a profit of 69 cents per share
on revenue of $3.96 billion.
Gap's shares were up 1 percent in extended trading after
closing at $43.18 on the New York Stock Exchange on Thursday.
(Reporting by Ramkumar Iyer in Bangalore; Editing by Saumyadeb