The AP reports that GAP 3rd Quarter Earnings rose 26% as marketing prices fell. According to the article:Gap, which also operates Banana Republic stores, said it cut marketing expenses by about $75 million in the quarter, as planned.
On the sales side, one of the few bright spots came from online sales, which surged 36 percent to $247 million, from $182 million in the third quarter of last year. Gap operates online shoe store Piperlime, gap.com and other e-commerce sites.
The company ended the quarter with $1.7 billion in cash and investments. It repurchased 48 million shares during the quarter for $887 million -- part of a $1.5 billion share repurchase program announced in August.
Aggressive cost-cutting has reduced in 1,500 job cuts this year, and the company is reorganizing its North American real-estate holdings -- selling underperforming, older stores in aging markets and buying property in hot growth suburbs and urban retail centers.
The company opened 187 new stores this year and closed 127 stores, including closure or conversion of all Old Navy outlet stores, and the closure of all Forth & Towne stores, which targeted older women. Overall, the company increased store square footage by 2 percent.
Analysts peppered executives about the seemingly slow pace of the turnaround. Reorganizing the company's retail holdings could take years, but Murphy emphasized that the turnaround has already begun.
"Round one is just identifying what we're going to do, and then we focus on executing," he said.
The piece, of course, credits lower marketing costs, increased online sales and cost-cutting measures as being the driving forces behind this surge in profits. I wonder if one of these 'cost-cutting' measures was the cheap labor costs that Gap enjoyed from their use of child labor in sweatshops.
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