American apparel brand Gap raises sales forecasts and prudently manages inventory

American casual wear brand Gap (Gap) announced brighter quarterly profits by launching bright-colored jeans and compressed inventory, and the clothing retailer raised its sales forecast.

However, due to dreary goods, especially in the competitive back-to-school shopping season, it is difficult to attract youngsters. The teen fashion retailer Aeropostale has been flat and had to cut prices.


For almost 10 years, the Gap Group has been exploring its fashion collocation style and lost to its rivals, the Inditex Group, the parent company of the Zara brand.


However, its major brand has already reversed the situation last year. The partnership between the Banana Republic brand and the TV show "Mad Men" has been a major success, and the chain recently gave an advisory role to the well-known American designer Nassio Rodriguez.


During the quarter, the Group’s Gap, Banana Republic and Old Navy branded sales all increased in North America, and profits increased by 28.6%. The only unsatisfactory performance was the relatively weak sales performance in its European market and the decline in same-store sales.


Richard Jeff, an analyst with Steve Nicholas, said that on the other hand, the Aeropostale brand sold too many basic items and the number of fashion items was insufficient, while young people could only buy it at Gap, resulting in the reduction of unsold Aeropostale products. The price for sale, no profit.


Jeff noted that the promotional environment for young consumers will continue to be maintained. He said: "We believe that the company will improve accordingly and it is very important for it to develop its fashion products as soon as possible."


The rate of youth employment is at the lowest level since 1964, making more young people rely on their parents to fund their back-to-school shopping activities. For this reason, many stores will face price pressures on what they can afford.