Posted: Friday, August 22, 2008, 9:26AM
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Inventory revamp helps US giant bridge profit gap
Tighter inventory controls have helped US retail giant Gap record a massive leap in profits. The largest U.S. clothing chain saw its second quarter profits rise by 51 per cent, with its net income in the quarter ending August soaring to $229m, from $152m a year earlier.
The company's chief executive, Glenn Murphy, took steps to implement a tighter inventory strategy after the company reported huge loses in the last financial year.
Gap's inventory per square foot declined 17 per cent; a figure the company expect to fall further as the year draws to a close.
The company has also lowered its capital spending forecast to $450 million after slashing its expected number of new store openings.
"The theme is to reduce inventory and manage the expenses," said CL King & Associates analyst Mark Montagna.
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