Gap sees growth online, plans 185 new stores this year

Gap (NYSE: GPS) on Thursday said that quarterly sales from e-commerce grew 13 percent to $575 million, despite the company having a drop in overall earnings.

Gap's first-quarter profit fell 22 percent, hurt by weakening foreign currencies and a brutal winter that led to a slow start to spring selling.

With strong growth online, Gap said it is investing $300 million in technology over the next three years to upgrade its e-commerce business. The chain plans to strengthen its omnichannel strategies and click-and-collect program, called Reserve in Store, which allows customers to make online reservations for store pickup. Reserve in Store has been rolled out to 500 Gap stores and 400 Banana Republic stores the company said. By the end of the second quarter, the chain will have that service in all Gap-branded stores.

In addition to new online services, Gap is also upgrading its websites, starting with Old Navy which will debut a revamped website in June.

Looking ahead, Gap said it is on track to open 185 new stores in fiscal 2014. The company's Athleta brand, which offers women's performance apparel, will get 35 new stores. Seventy stores will be shut down during the year, weighted towards Gap North America.

The retailer earned $260 million in the three-month period ended May 3, down from $333 million in the year-ago period. Revenue increased 1.2 percent to $3.77 billion.

Overall same-store sales for the quarter declined 1 percent. The company's flagship Gap chain posted a same-store sales decline of 5 percent in the first quarter, compared with a 3 percent increase in the same period a year earlier. Sales at Old Navy rose 1 percent in the first quarter, versus a 3 percent gain last year. Banana Republic declined 1 percent, compared with a flat performance the previous year.

For more:
-See this Gap earnings call transcript

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