Profits at Gap rose 21% for the fourth quarter, after a drop in sales was offset by cost cuts.
Group fourth-quarter profits for the 13 weeks to February 2 were up 21% to US$265 million (£133.6m) against US$219m (£110.4m) for the period last year, thanks to cost cutting.
Fourth-quarter like-for-like sales were down 3% compared with a drop of 7% the previous quarter. Net sales for the group during the quarter were US$4.7 billion (£2.37bn), down from US$4.9bn (£2.47bn) for the 14 weeks to February 3 2007.
The company, which runs Gap, Old Navy and Banana Republic, said it would open 15 stores by the end of the financial year, increasing its square footage by less than 0.5%, against a 1.8% rise for 2007.
Chairman and chief executive Glenn Murphy said Gap would open five Banana Republic stores in the UK this year, following its debut on London’s Regent Street later this month. It also aims to expand its overseas presence by doubling its portfolio of 70 stores in the Middle East and south-east Asia.
Net sales for the 52 weeks to February 2 fell 4% like-for-like to US$15.8bn (£7.97bn), compared with US$15.9bn (£8.02bn) for the 53 weeks to February 3.
Murphy said: “In 2007, the company made the business changes necessary to deliver improved earnings for shareholders. While we’re aware of the challenging economic environment, our team is committed to delivering the right product. We will work to reconnect with customers while we continue to improve our results.”
Gap’s international sales slump slowed in the fourth quarter, down 1% like-for-like, compared with a 6% drop for the same period last year.
International net sales, which include the UK, Japan and France, rose to US$510m (£257.2m) for the fourth quarter, against US$497m (£250.6m) last year.
Online sales rose to US$289m (£145m) from US$252m (£126.8m) the year before.