Gap beats expectations as Q1 profit climbs 40%

New York City Gap reported Thursday that its first-quarter net income climbed 40% as revenue increased at all of its brands, and beat analysts’ expectations. The company raised its profit forecast for the full year.

The company said that it earned $302 million for the three-month period that ended May 1, compared with $215 million a year earlier.

Gap's quarterly revenue rose 6.4% to $3.33 billion. Led by low-price Old Navy, the company's same-store sales rose 4% for the quarter. Same-store sales at Old Navy stores in North American rose 7%. They rose 5% for Banana Republic stores in North America, and 2% for Gap's North American business.

"We got off to a great start by improving our top line and delivering significant earnings growth," chairman and CEO Glenn Murphy said in a statement.

Fueled by its turnaround in the United States, the company is in a strong position to expand overseas and online, he said. Gap announced in February that it plans to open its first Gap stores in China and Italy and expand Banana Republic in Europe. It also aims to offer e-commerce for customers in Canada, the United Kingdom and nine other countries in Europe.