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Ditching TV Ads Helps Put Gap Back on Track

Clothing seller sees profit up 40% after cutting marketing costs

By Rob Quinn,  Newser Staff

Posted May 27, 2008 10:27 AM CDT

(Newser) – The Gap's balance sheet is back in the black, helped along by its decision to stop spending on TV ads, Advertising Age reports. The clothing retailer slashed marketing spending by nearly a fifth in the first quarter and saw profits leap 40%, even as sales slumped. The Gap has switched its focus to merchandising initiatives instead.

One analyst said it would be "a waste of money" for the Gap to spend on ads in the current climate. "In this kind of an economic environment, traffic is slow anyway, and there's so much competition with advertising," she said. "If there was a time for them to do this, it's not that bad of a time."

A Gap customer, left, guys clothes at a Gap store in Palo Alto, Calif., Wednesday, May 21, 2008.
A Gap customer, left, guys clothes at a Gap store in Palo Alto, Calif., Wednesday, May 21, 2008.   (AP Photo/Paul Sakuma)
A customer leaves the Gap store in San Francisco. Gap's profits are up 40% for the first quarter of 2008, way ahead of many of its competitors.
A customer leaves the Gap store in San Francisco. Gap's profits are up 40% for the first quarter of 2008, way ahead of many of its competitors.   (AP Photo/Paul Sakuma)
A shopper walks out of the Gap store in Beverly Hills, Calif., Monday, May 7, 2007.
A shopper walks out of the Gap store in Beverly Hills, Calif., Monday, May 7, 2007.   (AP Photo/Kevork Djansezian)
A sale is underway at a Gap store in The Grove shopping area in Los Angeles, Thursday, April 12, 2007.
A sale is underway at a Gap store in The Grove shopping area in Los Angeles, Thursday, April 12, 2007.   (AP Photo/Reed Saxon)
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