Gap Inc., the largest U.S. clothing retailer, reported earnings in line with Wall Street expectations, and increased its full-year outlook. For the quarter, Gap net income was $152 million, or $0.19 per share, up from $128 million ($0.15/share) last year. Sales fell 1% to $3.69 billion from $3.71 billion a year ago. Analysts were 
expecting EPS of $0.19 cents a share and sales of $3.72 billion. Same store sales decreased 5%. Gap trimmed costs by cutting 2,200 jobs during the first half of the year, and said it expects a pretax annualized cost savings of approximately $100 million from the move. "During the second quarter, we made solid progress stabilizing our business, streamlining our organization," board member Bob Fisher said (see full Earnings Call Transcript later today). The company also increased its earnings forecast for the year from $0.76 to $0.86 a share to $0.83 to $0.88. CL King & Associates analyst Mark Montagna was upbeat on the quarter saying "It appears as though the merchandise has made a turn. We're optimistic with the company going forward." Gap also announced its board of directors had approved a new share repurchase program of $1.5 billion. The company traded up 2% to $17.78 in after hours trading; shares have lost almost 11% YTD.
Sources: Press release (.pdf), Bloomberg, Wall Street Journal
Commentary: Gap's New CEO: Good Move For The Company • Is Gap Finally Getting Their Act Together?
Stocks/ETFs to watch: GPS. Competitors: ANF, AEO, JCG. ETFs: RXI, PBJ, RTH
Earnings call transcripts: The Gap Q1 2007
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