SAN FRANCISCO, United States — Gap Inc. fell as much as 5 percent in late trading after the retailer forecast annual profit that was less than analysts estimated.
Gap slid 1.6 percent to $40.70 at 4:04 p.m. in New York after dropping as low as $39.31. The San Francisco-based company’s shares had gained 33 percent this year through the close of regular trading today, the best performance for an apparel company in the Standard & Poor’s 500 Retailing Index.
Chief Executive Officer Glenn Murphy is working to keep sales rising with discounts meant to draw shoppers that still are holding back amid elevated unemployment and slower economic growth. While Gap said first-quarter profit rose to 71 cents a share, exceeding the 69-cent top end of its forecast, the company maintained its projection that profit this year would be $2.52 to $2.60. Analysts estimated $2.72, on average.
“Gap is executing better than it has for years,” Erika Maschmeyer, an analyst at Robert W. Baird & Co. in Chicago with a neutral rating on the stock, wrote in a note before results were announced. “However, we believe risk and reward is balanced at current levels given the choppy macro-environment and competitive promotional landscape.”
Net income for the quarter ended May 4 rose 43 percent to $333 million, or 71 cents a share, from $233 million, or 47 cents, a year earlier, the company said today in a statement. Analysts projected 69 cents, the average of 24 estimates compiled by Bloomberg.
Same-store sales at the Banana Republic brand were little changed in the first quarter while the Gap and Old Navy brands gained 3 percent each.
By: Lindsey Rupp; Editors: Kevin Orland, James Callan