Gap Inc. reported that its first-quarter profit fell almost 14% as the clothing chain faced sluggish consumer demand during the recession, but the results narrowly beat Wall Street estimates.
The San Francisco-based retailer, which operates Banana Republic and Old Navy stores as well as the Gap, said Thursday that it earned $215 million, or 31 cents a share, for the three months that ended May 2. In the same period a year earlier it earned $249 million, or 34 cents. Revenue dropped 8% to $3.13 billion.
Sales at stores open at least a year fell 8%. Same-store sales are considered a key indicator of a retailer's health. Analysts had forecast profit of 30 cents a share on revenue of $3.14 billion.
Many clothing retailers are struggling with weak sales. To drive customer traffic, Gap is testing new store models for all three of its chains. In particular, the company hopes its low-price Old Navy chain, which has been retooled to focus more on frugal mothers, will be a vehicle for growth. The company launched an ad campaign for Old Navy in February and is overhauling its fashions.
Gap's North American division suffered a 12% decline in same-store sales, while same-store sales at Banana Republic's North American division dropped 13%. Old Navy posted just a 3% decline.
Gap shares rose 5 cents to close at $15.98.