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.
In other Gap news, CEO Glen Murphy is turning his attention to getting the company’s ailing namesake brand on track, according to a report in the Wall Street Journal. Currently, Gap North America accounts for approximately a quarter of the company's total revenue.
In his first interview since taking the reins at Gap in 2007, Murphy told the newspaper that his top priority with regards to Gap stores is fixing women's shirts. Formerly a critical driver of sales, the category has suffered for quite some time.
According to the report, Murphy has spent most of the past few weeks in New York City with the Gap team, working to fill holes in the fall assortment which will hit stores in August. In early May, Gap announced that Patrick Robinson, the executive VP for Gap Global Design for Adult and Body, was being let go.