DALLAS, Oct 10, 2002/ FW/ --- Showing signs that the worst is over for the San Francisco-based retailer, September sales improved 6%, but comparable same store sales is still down 2%.

The company reported today sales of $1.3 billion for September, representing a 6% increase from $1.2 billion last year.

And though comp store sales is still down 2% and the 30th consecutive month, it is a marked improvement from 17% decrease last year.

"Overall, the negative traffic trends and promotional retail environment experienced in August continued throughout September, which led to an increase in promotional activity, " said Chief Financial Officer Heidi Kunz.

"However, compared to last year, we sold less at markdown and had better markdown margins, resulting in a year-over-year improvement in total company margins," Ms. Kunz added.

Ms. Kunz also confirmed that the West Coast port closures has affected the delivery of the holiday merchandise to the stores.

"For all three brands, the closures have impacted the receipt of Holiday merchandise that was anticipated to be delivered to stores in late October and mid November. As a result, we expect portions of the Holiday flows to arrive in-stores up to a few weeks later than the original anticipated in-store dates," Ms. Kunz explained.

As the holiday shopping approaches, all retailers including The Gap are gearing up to face the one of the more challenging retail environment.

With an ailing U.S. economy, holiday shoppers are expected to be budget-conscious this holiday season.

With the increase sales for September, The Gap shows that it is already turning around. The company needs to continue this momentum during the holiday shopping season to ensure that it will be well on the road to recovery in 2003.