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We all now that old philosophical question: If a tree fell in the woods, but no one heard it, did it still fall? The Business Press Maven's favorite variation on it is this: If a husband said something in the woods, but there was no one there to hear him, would he still be wrong?

For our purposes today, let's go with this version: If a giant retailer reported decent results, but it was all due to cost-cutting and the fundamental conditions of the stores remained questionable, did the company still report decent results?

When it comes to headlines about


(GPS) - Get Gap, Inc. Report

, corners of the business media -- those gullible little devils -- sure thought so. Worse, beyond the headlines, few media reports, if any, related Gap's sales to inventory -- a key measurement, at least to those who might want to achieve of level of understanding about what the future might hold.

Look at this


headline: "

Gap profit beats Street by a penny


This misbegotten headline plays up the Wall Street-business media expectations game to the exclusion of all else, including the central fact that Gap only beat because of cost-cutting.

From a financial perspective, there is no great shame in cost-cutting. But whether the company fires some of its employees or trims its inventory, there is a finite amount of cost-cutting it can do. When sales are still dropping like rocks but a profit beat was eeked out because of cost cuts --well, mention the dropping rocks.

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, no fools, did just that. Look at how this headline better informs you, the savvy investor, by staying clear of the expectations game (which means little, considering) and mentioning the major factor: "

Gap Profits Up on Cost-Cutting


There you have it. The article opens by allowing that progress was signaled with the cost reductions but adding that Gap "continues to face serious issues with product acceptance, drawing customers into the stores, and operating locations that are too large for the offering."

Nevertheless, missing from this otherwise-decent article is any explanation about the state of inventory depletion vs. sales, a key metric for those in the know in retailing.

Gap's sales were down somewhere close to 6% while inventories were down 17%. On the positive side, this shows you what a good job the company has been doing trimming lame inventory. It's disappearing faster than the sales rate. Gap's inventories have obviously been out of whack for a long time, so it's good to see that it's capable of getting things under better control.

But here's the rub: With inventory control a good part of the cost savings that made Gap's earnings look unnaturally good compared with expectations, how much further can the company go? Since inventory depletion outpaces sales by a good measure, not much further.

Moreover, there is an old saw in retailing that you can't sell it if you don't have it on the shelves and -- well, there is something to it. Take too much off the shelves and you have empty racks. In the extraordinarily competitive area that Gap operates in, that is an especially challenging situation.

Look, the savvy investor has to see the forest from the trees. Here is the forest: Gap's profits were up but due to cost-cutting -- which is a more fleeting factor than good sales. And Gap's been ridding itself of tons of inventory, but there are big limits there -- and eventually big challenges.

Gap is showing some signs of competent management. But no matter what nonsense the business media peddle on this particular earnings report, there are still too many danger signs to invest in the hopes of a legitimate and lasting comeback. Yet.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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