Gap Meets Estimates as Old Navy Helps Prop Up Retailer

NEW YORK, United States — Gap Inc., the biggest apparel-focused retailer in the U.S., posted first-quarter profit that met analysts' estimates after its Old Navy chain helped make up for sluggish sales at its other divisions.

Excluding some items, profit was 56 cents a share, the San Francisco-based company said in a statement on Thursday. Gap told investors earlier this month that earnings would be 55 cents to 56 cents, and analysts pegged their estimates to the high end of that range.

Old Navy, the company’s lower-end chain, has attracted customers with athletic apparel at affordable prices. The question now is whether Chief Executive Officer Art Peck can reinvigorate the company’s Gap brand. That division saw same- store sales tumble 10 percent last quarter.

“Old Navy’s performance gives me confidence -- the team has hit the right formula,” Peck said in the statement. “Gap remains a top priority as we focus on re-establishing the brand’s aesthetic to bring to life an optimistic and elevated sense of American style.”

Gap shares was little changed in extended trading after closing at $38.55 in New York. The stock is down 8.5 percent this year.

Total same-store sales — a benchmark that measures locations open at least a year, plus online orders — dropped 4 percent last quarter. Comparable sales at Old Navy rose 3 percent in the first quarter, while sales at the Banana Republic chain declined 8 percent.

Gap also reaffirmed its earnings forecast for the year, predicting $2.75 to $2.80 a share.

Peck, who was promoted to the CEO job in February, said the company is focused on stocking products that resonate with shoppers.

“We are making the changes necessary to improve our long- term performance,” he said.

By Lindsey Rupp; editors: Nick Turner, Kevin Orland.