Gap profit climbs 25 percent in 3Q

CHICAGO (AP) – Shoppers spent more money at low-price Old Navy stores in the third quarter this year, helping Gap Inc.’s profit climb 25 percent compared with last year, the retailer said Thursday.

Sales in Old Navy stores open at least a year rose 10 percent after sliding for at two years. A year earlier, for example, the figure – a key performance indicator for retailers – slipped 18 percent.

Gap earned $307 million, or 44 cents per share, during the three-month period that ended Oct. 31. That compares with a profit of $246 million, or 35 cents per share, a year earlier.

In addition to its namesake stores and Old Navy, Gap owns Banana Republic, Piperlime and Athleta.

The clothing chain’s overall sales climbed 0.8 percent to $3.59 billion.

Analysts surveyed by Thomson Reuters expected Gap to earn 43 cents per share on sales of $3.59 billion.

Gap had seen sales dip as the recession forced shoppers to focus more on necessities and less on nonessentials like the company’s popular trendy jeans.

Already slimming its inventory as part of a turnaround it initiated before the economic turmoil began, Gap responded to shoppers’ cutbacks by cutting even more in recent months and trimming the size and number of its stores.

It also retooled Old Navy to better cater to frugal moms and began focusing on new merchandising and marketing initiatives to bring customers back to the chain.

Executives said Gap plans to continue its recent marketing and advertising blitz during the holidays.

"We’re pleased with our third-quarter results," Chairman and CEO Glenn Murphy said in a statement. "Looking ahead to the holiday season, we’re focused on gaining market share as we invest in marketing and present a strong value proposition to customers."

Gap is based in San Francisco. It operates more than 3,100 stores around the globe.