Gap Inc. earnings rise 40%

Apparel company Gap Inc. reported robust first-quarter profit Thursday and said sales grew across all of its brands.

For the three months that ended May 1, the San Francisco retailer said profit rose 40% to $302 million, or 45 cents a share, compared with $215 million, or 31 cents, in the same period a year earlier.

“We got off to a great start this year,” Chief Executive Glenn Murphy said in a statement. “Fueled by our strengthened economic model, we’re in a strong position to execute on our international and online strategic investments as we continue to build upon the momentum in North America.”

Sales at stores open at least a year — known as same-store sales and considered an important measure of a retailer’s health — increased 4%. Total sales rose 6.4% to $3.33 billion.

Retailers across the spectrum have reported healthy profits and sales this month, showing that consumer spending is starting to pick up — even as the economy continues to face unemployment woes and other financial worries.

“It is a baffling situation; the only thing I can attribute it to is we’re a consuming economy,” said Eli Portnoy, a retail expert and chief brand strategist of Portnoy Group. “We like to buy stuff and we can only be in withdrawal for so long in this country.”

Gap, parent to the Gap, Banana Republic and Old Navy brands, also raised its earnings outlook for the fiscal year. The company said it now expected earnings per share of $1.77 to $1.82, up from its previous estimate of $1.70 to $1.75.

The company ended the first quarter of fiscal year 2010 with 3,085 store locations in the U.S., Canada, Europe and Asia. It said it expected to open about 65 stores this year with a focus on international and outlet locations and close about 110 stores.

Gap reported its earnings after the markets closed. During regular trading Thursday, shares fell 60 cents, or 2.7%, to $21.74.