Comparable sales throughout the quarter fell by 3 per cent year-on-year (YoY) in Q1 FY23. Additionally, the company saw a 4 per cent decrease in store sales, ending the quarter with a total of 3,453 store locations across over 40 countries, of which 2,601 were company-operated.

Meanwhile, online sales experienced a sharper decline of 9 per cent in Q1 FY23 compared to the same period last year, accounting for 37 per cent of total net sales, the company said in a media release.

Despite these setbacks, the company's gross margin results offer a silver lining. The reported gross margin stood at 37.1 per cent. However, excluding $4 million in restructuring costs, the adjusted gross margin rose significantly by 570 basis points YoY to reach 37.2 per cent.

Gap also reported an operating loss of $10 million, translating to a negative operating margin of 0.3 per cent. After adjustments excluding a $47 million gain from the sale of an office building and $75 million of restructuring costs, the company posted an operating income of $18 million and an operating margin of 0.5 per cent.

The company reported a net loss of $18 million for the quarter, with a diluted loss per share of $0.05. Adjusted for the gain on sale and restructuring costs, the net income came in at $3 million, yielding adjusted diluted earnings per share of $0.01.

In a more detailed breakdown of global brand results, Old Navy saw net sales of $1.8 billion, a decrease of 1 per cent YoY, driven by strength in the women's category which offset sluggish demand in the active and kid's categories. Its comparable sales also fell by 1 per cent.

Gap reported net sales of $692 million, marking a 13 per cent drop compared to last year, though its comparable sales saw a 1 per cent increase.

Banana Republic's net sales stood at $432 million, reflecting a 10 per cent decrease on top of 24 per cent growth the previous year, with comparable sales down by 8 per cent, the release added.

Finally, Athleta posted net sales of $321 million, down 11 per cent YoY, and saw a 13 per cent decrease in comparable sales.

"We continue to take the necessary actions to drive critical change at Gap Inc, ultimately getting us back on a path toward delivering consistent results long-term," said Bob Martin, executive chairman and interim CEO, Gap Inc "While the macro and consumer environment remain uncertain, Q1 underscores our ability to deliver improvements to the business including share gains at Old Navy and Gap Brand, adjusted operating margin expansion, reduction in inventory, and strength in our balance sheet.”

Fibre2Fashion News Desk (DP)