May 29, 2008, 12:00 AM

Web sales at Gap climb 21% as total sales fall 5%

The online channel continues to lead financial performance at Gap, where web sales increased 21.3% year-over-year to $236 million for the first quarter ended May 3. Web sales accounted for 6.98% of total Q1 net sales, up from 5.49% a year ago.

The online channel continues to lead financial performance at Gap Inc., where web sales increased 21.3% to $236 million for the first quarter ended May 3, from $195 million a year ago. Web sales accounted for 6.98% of total Q1 net sales, compared to 5.49% in the same period last year, Gap says.

Total Q1 net sales declined 4.8% year-over-year to $3.38 billion from $3.55 billion, as comp store sales fell 11%, the retailer says. A year ago, comp store sales were down 4%, it says.

Q1 earnings from continuing operations rose 21% to $249 million from $205 million, as gross profit margin increased by 150 basis points to 39.7%, the company says. Its Q1 operating margin was 11.3%, and Gap expects an operating margin for the full fiscal year of 8.5% to 9.5%.

“We are pleased with our first quarter results, as we delivered solid earnings growth in a difficult environment,” says Glenn Murphy, chairman and CEO. “Looking ahead, we are focused on bringing compelling product and shopping experiences to our customers while managing costs tightly.

Gap, No. 24 in the Internet Retailer Top 500 Guide, operates retail web sites and stores under several brands including Gap, GapKids, GapMaternity, Banana Republic and Old Navy. It ended the first quarter with 3,177 stores, and it expects to add 115 stores in the current fiscal year while also closing 115, Gap says.

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