Apparel retailer Gap Inc. (GPS) said Thursday after the markets closed that its first quarter profit remained flat with last year, a higher expenses offset a 6% increase in sales.
The company's quarterly earnings per share, excluding items, came in line with analysts' expectations. Based on first quarter performance, the company raised its annual earnings outlook.
"During the quarter, we improved sales, grew earnings per share, and continued investing in the business to drive performance," said Glenn Murphy, chairman and chief executive officer of Gap Inc.
Gap shares are currently gaining 1.29% in after hours trading after closing the day's regular trading session at $26.31, down 79 cents or 2.92%.
Comparable sales increased 4% in the first quarter. Comparable sales rose for Gap stores in North America and Banana Republic's North America fleet, while it grew 4% for Old Navy's North America stores. International comparable sales fell 4%.
Gross margin for the quarter fell to 39.4% from 39.6% a year earlier.
The company repurchased $18 million worth of shares in the first quarter and ended the quarter with 491 million shares outstanding and $2.0 billion in cash, cash equivalents, and short-term investments.
The company said it expects the level of share repurchase activity in fiscal year 2012 to be more modest than in fiscal year 2011.
For the first quarter ended April 28, 2012, the company reported net income of $233 million, the same as last year.
Earnings per share for the first quarter rose to $0.47 from $0.40 a year earlier, due to lower share counts. The latest quarter EPS includes a benefit of about $0.01 related to favorable reassessments of tax positions in the quarter.
On average, 25 analysts polled by Thomson Reuters expected the company to earn $0.46 per share for the first quarter. Analysts' estimates typically exclude special items.
Net sales for the first quarter rose 6% to $3.49 billion from $3.30 billion in the same quarter last year. Twenty-five analysts had a consensus revenue estimate of $3.47 billion for the first quarter.
The company said it now expects fiscal year 2012 earnings to be $1.78 to $1.83 per share, compared to its prior expectations of $1.75 to $1.80 share. Analysts currently expect the company to earn $1.97 per share for the fiscal year 2012.
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