Gap Q1 Profit, Sales Drop; CEO Vows To Focus On 'greater Product Acceptance

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Gap Inc. said Thursday its fiscal first-quarter profit fell to $239 million, or 56 cents a share, from $260 million, or 58 cents, a year earlier. The most recent quarter's result included a 2-cent one-time benefit tied to tax-related interest expense. Analysts surveyed by FactSet were looking for first-quarter profit of 55 cents a share. As previously reported, sales fell to $3.66 billion from $3.77 billion. Comparable sales declined 4%, hurt by a 10% drop at its namesake brand and an 8% decline at Banana Republic. The discount Old Navy unit's same-store sales rose 3%. Gap Chief Executive Art Peck said fixing the Gap brand continues to be a top priority. He said the company, with its leadership team in place, will make necessary changes, including an "intense focus on greater product acceptance." Gap kept its full-year per-share profit forecast of $2.75 to $2.80 a share. Analysts were looking for $2.78 a share. Gap shares were little changed in after-hours trading. See related story on why H&M has outperformed.

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