Trendy retailer Gap Inc. (NYSE: GPS) announced Thursday that its first-quarter earnings declined compared to a year ago. The khaki king's earnings were pulled lower by poor sales due to the economic crisis. That said, the company's quarterly earnings topped the consensus estimate. For the quarter, Gap earned 31 cents per share, down from 34 cents a year ago, but a penny better than analyst projections. Sales for the quarter dropped to $3.13 billion, matching the Street's expected $3.14 billion.
The company's North American first-quarter net sales dropped to $834 million from last year's $976 million. Gap's Banana Republic North America dropped to $475 million from $538 million last year. Old Navy had quarterly net sales of $1.18 billion, short of last year's $1.24 billion. Gap's international revenue slipped to $369 million from $398 million last year. By division, Gap same-store sales were 12% lower, Banana Republic sales dropped 13%, and Old Navy sales fell 3%.
Technically, shares of Gap are trying to mount a comeback of sorts (as is the entire market). Gap's short-term bottom occurred during the first week of March, and the stock has trudged higher ever since. A major factor in this rally is the equity's 10-week moving average, which has provided support when needed. This trendline recently completed a bullish cross of its 50-week counterpart, which is often considered a bullish technical signal.
That said, the $17.50 level lurks overhead. This region acted as support in the past, and could now provide resistance. Technically, it is common for former levels of support to act as resistance. This region could be the next major hurdle for Gap.
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