Gap Warns Quarterly Profit May Fall Below Expectations

Gap Inc., the largest U.S. clothing chain, on Wednesday warned that fiscal first-quarter earnings may be lower than expected because of disappointing Easter sales.

Profit may be 1 or 2 cents less than analysts forecast for the quarter ended April 29, Chief Financial Officer Heidi Kunz said during a call announcing April sales. Earnings were expected to rise to 28 cents from the year-earlier 22 cents, according to analysts polled by First Call/Thomson Financial.

Sales at stores open at least a year rose 7% in April, less than gains of 10% or more some analysts had forecast. Other clothing chains, including American Eagle Outfitters Inc., Pacific Sunwear of California Inc. and Wet Seal Inc., also have said their sales were hurt by cool weather.

“Although we headed into April positioned to take advantage of a strong shopping month, the Easter shopping period turned out to be disappointing,” Kunz said.

“While Easter holidays typically drive strong sales in the three weeks leading up to Easter, we experienced only a week of strength.”

Shares of San Francisco-based Gap fell $1.88 to close at $37.25 on the New York Stock Exchange. They dropped to $36.75 on electronic networks after the New York close. The company announced its same-store sales in a news release after U.S. markets closed. It didn’t include the earnings outlook in the release.

Gap said poor weather hurt April sales in the East and Midwest. It said sales at its namesake stores increased by a high single-digit percentage. Its fast-growing Old Navy chain increased by less than the 7% to 9% some analysts had projected.

Its Banana Republic chain had a high single-digit percentage rise.