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Gap 1st-quarter net profit up 40 pct; shares rise
Gap Inc (GPS.N: Quote, Profile, Research) said on Thursday that first-quarter net profit jumped 40 percent, as tighter inventories, fewer markdowns and cost cutting helped lessen the effect of lower sales, and shares rose 2 percent in extended trading.

Chief Executive Officer Glenn Murphy said he saw "no signs of improvement in the psyche of the American consumer," but added that shoppers were responding positively to an improved assortment of classic clothing at its namesake Gap stores, even as the Old Navy chain continues to struggle.

The global apparel company, in the midst of a turnaround effort even as U.S. consumers are cutting back on spending, posted earnings that topped both company and Wall Street estimates, but sales were weaker than analysts expected.

First-quarter net income increased to $249 million, or 34 cents per share, from $178 million, or 22 cents per share, a year earlier.

That was above the 31 cents expected, on average, by analysts, according to Reuters Estimates, and Gap's own forecast of 30 cents to 32 cents per share.

Sales at the San Francisco-based retailer, which also operates the more upscale Banana Republic chain, fell nearly 5 percent to $3.38 billion from $3.55 billion, below the average analyst target of $3.44 billion.

Wall Street has applauded ongoing attempts to reduce spending, improve merchandise and limit markdowns at Gap's chains. Still, it has suffered from weaker traffic and declining same-store sales, a key gauge of retail performance, amid intense competition from rivals and past fashion missteps.
http://uk.reuters.com/article/governmentFilingsNews/idUKN2253122020080522