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Gap earnings fall 23% on soaring costs; CEO to focus turning around namesake division
San Francisco -- Gap reported Thursday that its first-quarter earnings plummeted 23% as costs rose faster than expected, and the chain dramatically lowered its full-year earnings forecast.
Gap is spending about 20% more to produce each item than it did a year ago -- a much faster rise than it expected, the Associated Press reported.
Gap’s net income was $233 million for the quarter ended April 30, compared with $302 million. The performance was slightly better than analysts expected, however.
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Walmart CEO talks traction on comps
Despite progress on several key merchandising initiatives during the first quarter, it wasn’t enough to prevent Walmart from logging a 1.1% decline in same-store sales, losing customer traffic and introducing the possibility the second quarter will bring more of the same. The company’s forecast for second quarter same-store sales envisions a range of possibilities between a 1% decline and 1% increase.