Gap Inc. net sales rise, comp-store sales decline

SAN FRANCISCO Gap Inc. reported net sales of $1.1 billion for the fiscal month of April, the four weeks ended May 3. Net sales increased 1% over last year's $1.09 billion. Comparable-store sales for April decreased 6%, compared with a 16% decrease for the like prior-year period.

Gap and Banana Republic comp-store sales remained flat, versus 14% and 13% decreases the prior year, respectively, while Old Navy comp-store sales decreased 12%, versus 20% in 2007, and International was at a negative 7%, versus a negative 5% the year prior.

"While April performance varied across each brand, we delivered merchandise margins significantly above last year while continuing to manage costs in a disciplined manner," said cfo Sabrina Simmons.

For the thirteen-week first quarter, net sales were $3.38 billion, a decrease of 5% from $3.55 billion in 2007. Comparable-store sales decreased 11%, versus a 4% drop in the prior year period.

First-quarter comp-store sales for Gap dropped 7%, versus 4% last year; Banana Republic saw a 4% decrease, versus a decrease of 2% last year; Old Navy reported negative 18%, versus negative 5% last year; and International comp-store sales dropped 5%, versus 3% the year prior.

"We are pleased with our ability to achieve bottom line earnings growth in the first quarter," added Simmons. "However, our traffic patterns and sales continue to be challenging, it is still early in the year, and the economic environment remains volatile. We are reaffirming our earnings outlook for the year and continue to expect  diluted earnings per share of $1.20 to $1.27."

The company expects diluted EPS on a GAAP basis for the FY 2008 first quarter to be between 30 and 32 cents. Included in the EPS guidance is a benefit of approximately $15 million to pre-tax earnings from a reduction of interest expense accruals primarily from foreign tax audit events.