Gap Posts $34 Million Net Loss

SAN FRANCISCO – Gap Inc. , the biggest U.S. clothing retailer, Tuesday reported a fiscal fourth-quarter loss of $34 million, as the battered retailer struggled with declining margins and weak sales, and said it will close the same number of stores this year as last year.

San Francisco-based Gap, which has battled against nearly two years of dwindling sales at its stores open at least a year, said it will close about 51 store locations in 2002. Its expansion in square footage will hover around 3 percent this year.

The retailer, which also owns Banana Republic and Old Navy stores, reported a net loss of $34 million, or 4 cents a share, for the fiscal quarter ended Feb. 2. This reversed a year-earlier profit of $272 million, or 31 cents a share.

Gap shares fell about 7 percent to $12.60 in after-hours trading on Instinet, compared with Tuesday's closing price of $13.55 on the New York Stock Exchange.

"2001 was our most difficult year ever," said Gap President and Chief Executive Millard Drexler in a news release, adding that the company was "putting the right teams in place."

Wall Street estimates mirrored Gap's own forecast, ranging from a loss of 3 cents to 5 cents a share, with a mean estimate of 4 cents, according to research firm Thomson Financial/First Call.

The results included a $15 million after-tax charge for sub-lease losses at the company's headquarters facilities in California and the planned closures of distribution centers in Kentucky and Holland.

Chief Financial Officer Heidi Kunz said same-store sales through Monday are down 17 percent. For the month, she said the company expects Banana Republic and Old Navy "will beat projections while Gap will fall short." Gap, which operates about 4,000 stores, is the company's largest division, with about 2,900 stores.

Gap said same-store sales declined 16 percent in the quarter. Net sales decreased 11 percent to $4.1 billion in the 13 weeks ended Feb. 2, from $4.6 billion in the same 14-week period last year.

Divisionally, same-store sales slumped 16 percent at Gap, 20 percent at Old Navy and 7 percent at Banana Republic, the retailer said.