Gap sees strong 3Q earnings to weakness in the rest of the industry

Despite a difficult overall retail environment, Gap's yoy quarterly earnings grew 26% from last year's at a time when most retailers are reporting far more dismal figures (see [recent earnings], for instance). While quarterly sales growth were just shy of flat at negative 1%, significant cost reductions (lighter, nimbler advertising and better inventory management) led to much healthier margins than last year's. While there was a 5% decrease in comp sales from the previous quarter, it was flat with last year's quarter-to-quarter decrease. Gap concluded by raising its earnings forecast for the year, making it one of the few apparel retailers this quarter to do so.

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