May 17 (Bloomberg) -- Gap Inc., the largest U.S. specialty-apparel retailer, posted first-quarter profit that beat analysts’ estimates after sales for the period advanced to the highest level in four years.
Net income for the three months ended April 28 was $233 million, or 47 cents a share, compared with $233 million, or 40 cents, a year earlier, San Francisco-based Gap said today in a statement. Analysts projected 46 cents, the average of 26 estimates compiled by Bloomberg.
Gap has been a top performer in the Standard & Poor’s 500 Index this year as compelling merchandise and marketing at its namesake brand in North America drove the best same-store sales in two years. Analysts have been viewing the success of the spring collection as the start of a turnaround at Gap in North America, where the company has lost sales in recent years to fast-fashion competitors such as Hennes & Mauritz AB.
“This is the first full season we’ve seen the product significantly better, also probably the first season where the management team has had more confidence in the direction of the merchandise,” Betty Chen, a San Francisco-based analyst at Wedbush Securities, said before the results were announced. “That’s part of the reason they decided to reinvest in marketing this year, to support those product changes.”
Gap rose 6.4 percent to $28 at 4:52 p.m. in New York. Shares of the retailer had rallied 42 percent this year through the close of regular trading today, the fourth-best performance in the S&P 500.
Sales in the first quarter rose 5.9 percent to $3.49 billion from $3.3 billion a year ago, Gap said. That’s the best for the period since 2008, Bloomberg data show. Same-store sales rose 4 percent, compared with a 3 percent decline a year earlier.
Profit for this fiscal year will be as much as $1.83 per share, according to today’s statement. The forecast, up from a previous projection of a maximum of $1.80 per share, trailed the $1.98 average of 27 analysts’ estimates compiled by Bloomberg.
Gap spent more on short-term investments including marketing and operating costs in the first quarter, according to the statement.
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