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Gap reports flat Q1 profit, but shares rise, future prospects good
Posted On: 18-05-2012 04:08:34 AM

Apparel retailer Gap Inc reported gain in revenue at its Old Navy, Gap and Banana Republic chains and online retail, which has helped the retailer overcome rising costs and post same-as-last-year net income for the first quarter(Q1) ending April 30. The company raised its guidance for the year, and its shares climbed after hours. Gap is trying to regain its foothold in the market as a fashion forward brand, for which the Company has stepped up its marketing and pushed colourful trendy clothing. To further connect with the shopper, the retailer conceived a Gap Kids partnership with Diane Von Furstenberg and Banana Republic's partnership with AMC's hit show "Mad Men." Gapís net income was $233 million, or 47% per share, for the period ended April 28. The Company reportedly said that it included a benefit of a penny per share related to reassessing its tax position. Its revenue from stores open at least a year rose 4%. The measure rose 5% at Gap and Banana Republic stores in North America and 4% at Old Navy stores in North America. It fell 4% at international stores, though total overseas revenue rose 13% to $511 million. Gap said its operating expenses were $980 million, up $62 million from a year earlier, and its margin was about 10%. Marketing expenses rose $20 million to $139 million in the most recent quarter, including greater investment in marketing the Gap brand.

The company has been expanding in other countries but is shutting down nearly 34% U.S. Gap stores by the end of 2013, compared with 2007, not including Gap Outlets. That will leave 700 Gap stores. The company plans to maintain its Old Navy stores in North America but make them smaller. More than two-thirds of the company's revenue came from stores in the U.S., nearly 12% percent was generated online and the rest in other countries.

 
 
 

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