Clothing retailer Gap, struggling to regain its fashion sense, has posted its first quarterly loss in at least 10 years.

The firm, which also runs Old Navy and Banana Republic stores, has suffered a lengthy deterioration in results, owing to a slowing US market and its failure to keep up with changing consumer tastes.

But industry experts said that Gap may have turned the corner, citing its improved control over costs and better inventory management.

Gap shares barely eased on the news, but have lost almost half their value over the past 12 months.

Into loss

Gap said its net loss for the third quarter was $179m - including a previously announced $131m tax charge - compared with a profit of $186m in the same period of 2000.

Excluding the tax charge, Gap posted a loss of $48m, driven primarily by a decline in margins and weaker sales.

Revenues for the quarter fell 2.2% to $3.3bn, while sales at stores open at least one year - a key measure of retail growth - tumbled 17%.

While the loss was deeper than most analysts had expected, the markets were cheered by the news that capital expenditures were $760m, around half their level a year earlier.

This means that the retailer is achieving its announced plan to scale back on new store openings and review its existing property arrangements.

Gap's store footage grew by only 20% in the quarter, compared with 32% a year earlier.

Gap's goals

Gap president and chief executive Millard Drexler said in a statement that the company's goals are to restore same-store sales and earnings performance by "tightly managing our business and focusing on the fundamentals.

"Our priorities are controlling costs, strengthening margins, and getting the product right for our customers," Mr Drexler said.

With most other issues in the business now under tighter control, this last aim is now the retailer's main target, analysts said.