Gap Q1 Net Profit Declines

reported a decline in its earnings for the first quarter on Thursday. The San Francisco, California-based company posted quarterly net income of $239 million, or $0.56 per share, compared to $260 million, or $0.58 per share, in the year-ago period. The latest quarter earnings included a $0.02 per share non-recurring benefit related to a reversal of tax-related interest expense. Its revenue slipped 3 percent to $3.66 billion from $3.77 billion. Analysts were expecting earnings of $0.56 per share on revenue of $3.75 billion. The average estimate among 24 Estimize users was for earnings of $0.58 per share and revenue of $3.80 billion. Its total comparable sales declined 4 percent in the quarter. Comparable sales at the Gap brand dropped 10 percent, while comparable sales slipped 8 percent at Banana Republic. Comparable sales rose 3 percent at Old Navy. Its operating expenses slipped to $996 million, from $1.02 billion in the year-ago quarter. Its operating margin narrowed to 10.6 percent in the first quarter, compared to 11.7 percent last year. The company distributed $329 million to shareholders during the quarter through share repurchases and dividends. Gap ended the quarter with $1.23 billion in cash and cash equivalents. "With our leadership team in place, we are making the changes necessary to improve our long-term performance, starting with an intense focus on greater product acceptance," said Art Peck, chief executive officer, Gap Inc. Gap reaffirmed its full-year earnings forecast of $2.75 to $2.80 per share. Gap shares rose 0.05 percent to $38.58 in the after-hours trading session.