May 24 (Bloomberg) -- Gap Inc. fell the most in a month after the retailer forecast annual profit that was less than analysts estimated.
The shares slid 2.9 percent to $40.15 at 10:01 a.m. in New York after earlier dropping as much as 3 percent for the biggest intraday decline since April 15. The San Francisco-based company’s stock had gained 33 percent this year through yesterday, the most for an apparel company in the Standard & Poor’s 500 Retailing Index.
Chief Executive Officer Glenn Murphy is working to keep sales rising with discounts meant to draw shoppers that still are holding back amid elevated unemployment and slower economic growth. While Gap said first-quarter profit rose to 71 cents a share, exceeding the 69-cent top end of its forecast, the company maintained its projection that profit this year would be $2.52 to $2.60. Analysts estimated $2.72, on average.
“This is a very common pattern” for Gap, Stephanie Wissink, a Minneapolis-based analyst at Piper Jaffray who rates the shares overweight, said in an e-mail. “They beat by a penny or two and reiterate. Over time the full-year inches up.”
Net income for the quarter ended May 4 rose 43 percent to $333 million, or 71 cents a share, from $233 million, or 47 cents, a year earlier, the company said yesterday in a statement. Analysts projected 69 cents, the average of 24 estimates compiled by Bloomberg.
Same-store sales at the Banana Republic brand were little changed in the first quarter while the Gap and Old Navy brands gained 3 percent each.
“For the first time if felt like, to us, the consumer was moving in a positive direction,” Murphy said on the earnings conference call. “I like to think that’s a good sign as we move forward.”
To contact the reporter on this story: Lindsey Rupp in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Robin Ajello at email@example.com