Gap Earnings and Revenue Top Expectations

Gap Inc.
Adam Jeffery | CNBC

Gap reported first-quarter earnings that beat Wall Street expectations, helped by a rise in same-store sales at its Old Navy and Gap chains and growth in Asia.

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The retailer, which also owns the Banana Republic chain, posted net income of $333 million, or 71 cents per share, for the quarter ended May 4, up 43 percent from $223 million, or 47 cents per share, a year earlier.

Net sales for the quarter improved 7 percent to $3.73 billion from $3.49 billion a year ago. Same-store sales rose 2 percent.

Analysts had expected the retailer to report earnings excluding items of 69 cents a share on $3.68 billion in revenue, according to a consensus estimate from Thomson Reuters.

Despite its rise in profit, Gap stuck to its full-year guidance, saying it expects to earn $2.52 to $2.60 a share.

The company gets 86 percent of its revenue in North America, and has been pushing into new international markets. But results have been mixed. Sales in Europe, where shoppers have been cutting back on spending, were flat, while in Asia, revenue rose 14.7 percent. Gap is pushing its namesake chain in the Chinese market and Old Navy in Japan.

Despite a difficult environment for retailers recently, as U.S. consumers are being squeezed by rising costs and static incomes, the sector has had some surprising beats in the quarter.

Macy's reported quarterly earnings that beat analysts' expectations on Wednesday, with strong sales that allowed the company to hike its dividend. And L Brands, parent of retail chains Victoria's Secret and Bath & Body Works, beat Street forecasts for the first quarter, posting earnings of 48 cents per share on sales of $2.27 billion.

Other retail mainstays haven't performed nearly as well, however.

Teen chain Aeropostale, which competes with Gap, said its first-quarter same-store sales fell 14 percent, citing bad weather and a tough economy. JC Penney reported a larger-than-expected loss for the quarter as the company attempts to right itself after the resignation of chief executive Ron Johnson, and Wal-Mart, America's largest retailer, fell short of Wall Street expectations due to slumping U.S. sales.