Gap Jumps After Profit Surpasses Estimates on April Sales
Gap Inc. (GPS) jumped the most in three months after posting preliminary first-quarter profit that topped analysts’ estimates, helped by an unexpected increase in April sales.
The shares climbed 3.3 percent to $40.52 at the close in New York for the biggest gain since Feb. 7.
Profit per share in the quarter through April was 56 cents to 57 cents, the company said in a statement. The average of 32 analysts’ estimates compiled by Bloomberg was 53 cents. Helping the quarter’s profit was a 9 percent gain in same-store sales in April. Analysts had projected a 0.5 percent decline.
“It’s definitely a better number than expected,” Simeon Siegel, a New-York based analyst with Nomura Securities, said in a phone interview. “We saw everyone do well. It was a combination of the Easter shift and effective use of promotions and a little bit of good weather releasing pent-up demand.”
Chief Executive Officer Glenn Murphy is working to maintain sales growth as apparel retailers look for new styles and increase discounts to offset flagging mall traffic. Gap is investing $300 million in technology over the next three years as it merges online and in-store services to provide features including self checkouts and Internet reservations for store pickup.
Sales in April were led by an 18 percent gain at Old Navy, the retailer’s value-focused brand. Banana Republic sales increased 7 percent while Gap’s namesake brand grew 3 percent.
U.S. retailers posted a 6.2 percent comparable-store sales gain in April, the biggest increase since June 2011, as better weather and the late holiday helped attract shoppers, researcher Retail Metrics Inc. also said yesterday.
Gap, based in San Francisco, will report full quarterly results on May 22.
Through the close yesterday, the stock has risen 0.4 percent in 2014, compared with an 11 percent drop for the Standard & Poor’s 500 Retailing Index.
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