Gap Q1 profit falls 14%

San Francisco Gap Thursday said its first-quarter profit dropped 14%, hurt by lower sales amid the economic slowdown. The company's quarterly earnings, however, exceeded analysts' expectations.

Gap posted net income of $215 million, down from $249 million in the prior-year quarter. Net sales declined to $3.13 billion from $3.38 billion in the same quarter last year.

Comparable-store sales dropped 3% at Old Navy, compared with an 18% decline a year earlier, 12% at Gap and 13% at Banana Republic.

Chief executive Glenn Murphy said he was “particularly encouraged” by Old Navy’s performance.

“We remain focused on increasing traffic and gaining back market share across all of our brands by offering customers the right products and shopping experiences,” Murphy said in the statement.

During the quarter, Gap opened 11 store locations and closed 11 store locations, compared with 33 openings and 23 closings for the prior-year quarter.

The company ended first quarter fiscal 2009 with 3,149 store locations. Net square footage decreased 0.3% from the end of fiscal year 2008.

Gap continues to expect that it will open about 50 stores and close about 100 stores for fiscal year 2009, including repositions. The company continues to expect that net square footage will decrease about 2% in fiscal year 2009 over last year. The company continues to expect capital spending of about $350 million for fiscal year 2009.