Clothing retailer Gap has reported an increase in quarterly net profit, even as its sales trends prove disappointing at its stores.

The retailer, which has more than 3,100 stores worldwide, also owns the Old Navy and Banana Republic chains.

Profit rose to $229m from $152m a year ago, but total sales fell 5% to $3.5bn from $3.69bn in the quarter.

Gap has been cutting costs, reducing inventory and slimming down its operations to boost profit margins.

Analysts expect shoppers to cut back on clothes as fuel and food bills bite.

News reported by The BBC

Two of the biggest-name US retailers, department store group JC Penney and clothing group Abercrombie & Fitch, have reported lower sales.

As higher mortgage and fuel bills hit consumer spending, both chains said same store sales were 4% down between May and 2 August.

However, Swedish fashion chain Hennes & Mauritz (H&M) said same-store sales rose 3% in July.

Analysts said H&M had performed better because it sells cheaper clothes.

“It shows the trend we have seen, that in a weak market H&M will perform better than the underlying clothing market,” said Peter Wallin from Kaupthing bank.

‘Iconic status’

Despite the continued success of some value retailers, mid-market brand Abercrombie and Fitch said it was not planning to cut prices to boost sales.

“We do not compete on price or promotion regardless of macroeconomic conditions, although it may be both easy and tempting to drive short-term sales with pricing and promotional efforts,” said chief executive Mike Jefferies.

He would not rule out raising prices “where quality and iconic status dictate.”

Same-store sales were up 3% at the Abercrombie outlets, but overall group sales were down after sharp falls at its other businesses including the children’s Abercrombie stores and brands Hollister and Ruehl.

Department store chain JC Penney said it is following another strategy – controlling costs.

“Our ability to protect our bottom line through rigorous expense control and effective inventory management was enhanced by good initial customer response to our new brand launches and the effectiveness of our promotional pricing actions,” said Myron Ullman, chief executive of JC Penney.

Mr Ullman also announced a 36% drop in profits during what he called “this difficult consumer environment” in the second quarter of the year.

News reported by The BBC

Britons are spending more time using communications services but paying less for them, says an Ofcom report.

Every day in 2007, the average consumer spent 7 hours and 9 minutes watching TV, on the phone, using the internet or using other services, it says.

Since 2002, mobile use has doubled and PC and laptop use has grown fourfold, says the watchdog’s annual review.

But the average UK household spend on communications in 2007 was £93.63 a month – a fall of £1.53 on 2006.

TV remains the most popular pastime, with the average person watching for 3 hours and 38 minutes a day last year.

In 2007 the average person in the UK spent 24 minutes per day on their computer and 10 minutes using their mobile.

Ofcom’s annual communications market review notes that monthly spend on communications has fallen for three years in a row.

Ofcom says consumers are getting increasingly canny about the way they buy services, switching providers or paying one fee for a bundle of services.

COMMUNICATIONS FACTS
Communications industry revenue topped £51.2bn in 2007
Average households spend £93.63 per month on communications services
87.2% have digital television
80% of new TV sales are high-definition sets
40% buy communications services in a bundled package
44% of adults use text messaging every day
36% of adults use the net every day
Source: Ofcom market review

Lower prices for broadband are one factor, with the average household spending £9.45 for an internet connection in 2007 compared with £9.87 in 2006.

Fierce competition between broadband providers is causing some concern that it may be difficult for the industry to raise the investment needed for faster networks.

But the report shows that broadband take-up is continuing to grow both at home and on the move.

By the end of 2007, Ofcom found, 58% of homes had broadband, compared with 52% a year earlier.

Dongle surge

The real surge, though, came in the use of mobile broadband after a big marketing push by mobile phone companies selling so-called “dongles”.

Between February and June this year, monthly sales of these devices, which give internet access to laptop users, rose from 69,000 to 133,000 a month.

According to Ofcom figures, two million people say they have used mobile broadband via a dongle or similar device and three-quarters of them say they use it at home as well as on the move – evidence that the mobile operators are beginning to compete with fixed-line businesses for broadband customers.

TV retains its popularity despite booming net, mobile and computer use

British consumers are also spending more time on the phone than ever before, with a 21% increase in minutes spent on mobile calls.

Even fixed-line calls are holding up with Ofcom seeing just a 2% fall in minutes spent calling.

The Ofcom report paints a picture of a country where consumers are making more and more use of modern media services – from YouTube to personal video recorders – while still retaining an interest in the traditional services.

Digital television is now in use in 87% of British homes, with many having hundreds of channels to choose from. Despite the variety, 57% of viewing in these multi-channel homes is of the five main channels.

Ofcom also noted that while the amount of TV viewing is up on 2006, the longer term trend shows a slight decline in viewing.

News reported by The BBC

Capitalise on your greatest asset – “Your existing customers!”

Marketing to gain new customers is possibly 5-10 times more expensive than marketing to your exisiting customers. Your existing customers already know you and have crossed the “Trust barrier” and purchased from you.

Customer service

It is crucial that your customer service is excellent and the product or service that you sell is a good one so that when a customer buys from you, they will want to come back. So if this is the case and you have happy customers, then why would you not market to them and ask them for more business?

Advertising and brochure production or cold calling is very expensive and you will be lucky to get over 1-2% response for your efforts! So if you can add further products or services to your business that either compliment or would appeal to your existing customers then you would not believe how much your business can grow!

I am not suggesting that you cease advertising for new customers, as you never should. However, you may wish to divert some of your spend towards marketing to your exisiting customers In fact, I recommend that you link your marketing spend to your turnover as a percentage of your total sales, so that the more sales you make the more you spend on advertising and so on!