May 21 (Bloomberg) -- Gap Inc., the largest U.S. clothing retailer, said first-quarter profit dropped 14 percent as consumers trimmed clothing purchases.

Net income fell to $215 million, or 31 cents a share, from $249 million, or 34 cents, a year earlier, the San Francisco- based company said today in a statement. Analysts predicted profit of 30 cents, the average of 17 estimates compiled by Bloomberg. Revenue declined 7.4 percent to $3.13 billion.

Chief Executive Officer Glenn Murphy reduced inventory and operating expenses during the quarter and said the company will focus on increasing traffic and improving merchandise across all its brands. Sales at stores open at least a year declined 8 percent in the quarter, compared with an 11 percent drop a year earlier.

“An improvement in the merchandise offering at each division is essential to reversing the four-year decline in the store sales,” Richard Jaffe, an analyst at Stifel, Nicolaus & Co. in New York, said in a May 18 note.

Comparable-store sales dropped 3 percent at Old Navy, which sells the least expensive clothes of Gap’s three chains, compared with an 18 percent decline a year earlier. Sales fell 12 percent at Gap and 13 percent at Banana Republic.

Old Navy

Murphy said he’s “particularly encouraged” by Old Navy’s performance.

“We remain focused on increasing traffic and gaining back market share across all of our brands by offering customers the right products and shopping experiences,” Murphy said in the statement.

Gap rose 2 cents to $16 at 4:15 p.m. after the close of New York Stock Exchange composite trading. The shares have gained 19 percent this year.

The clothing retailer reduced operating expenses by $73 million in the quarter. Second-quarter operating expenses will decline by $30 million to $50 million compared with the year- earlier period, the company said today.

Separately today, Aeropostale Inc., the U.S. teen retailer with more than 800 stores, said profit in the second quarter will climb to 43 cents a share to 45 cents, from 31 cents a year earlier. Analysts predicted profit of 37 cents, the average of 20 estimates compiled by Bloomberg.

First-quarter profit jumped 81 percent to $31.7 million, or 47 cents a share, from $17.5 million, or 26 cents, New York- based Aeropostale said in a statement. Analysts estimated earnings of 48 cents. Revenue climbed 21 percent to $408 million.

To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.

Last Updated: May 21, 2009 17:02 EDT