Ahead of the Bell: Gap

Gap rises in premarket on strong April sales results, better-than-expected 1Q forecast

Associated Press

NEW YORK (AP) -- Shares of Gap climbed 4 percent before Friday's opening bell after the retailer reported strong sales results for April and provided better-than-expected guidance for the first quarter.

On Thursday Gap Inc. said sales at stores open at least a year increased 9 percent in April. This was well above the 0.5 percent rise analysts polled by Thomson Reuters expected.

This figure is considered a key gauge of a retailer's health. It excludes results from stores recently opened or closed.

Oliver Chen of Citi Investment Research said in a client note that Gap's April performance benefited from a later Easter this year. He kept a "Buy" rating for the San Francisco company.

Laura Champine of Canaccord Genuity said that she anticipates Gap's same-store sales growth will pick up during the second half of the year as the retailer will have easier year-over-year sales comparisons.

"One month doesn't make a trend, but we are warming up to the stock," the analyst wrote.

Champine increased Gap's price target to $47 from $45 and maintained a "Hold" rating.

Gap — whose brands include Old Navy, Banana Republic and its namesake — also said that it anticipates first-quarter earnings of 56 cents to 57 cents per share on revenue of $3.77 billion. Analysts surveyed by FactSet predict earnings of 54 cents per share on revenue of $3.69 billion.

Gap's stock added $1.56, or 4 percent, to $40.80 in premarket trading an hour and a half before the market open.

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