NEW YORK, N.Y. – Gap Inc. offered an upbeat profit outlook for its third quarter as the clothing chain announced a solid October increase for a key sales yardstick that surpassed analysts’ expectations.
Shares of the clothing seller surged in after-hours trading Thursday after the results were reported.
The San Francisco-based chain, which owns the Gap, Banana Republic, Old Navy, Piperlime, Athleta and Intermix brands, saw a 4 per cent increase in revenue at stores open a year. The results beat expectations for a 0.1 per cent gain, according to Thomson Reuters.
The increase followed an unexpected drop in sales in September that threatened to stall momentum that Gap had enjoyed since early last year. Gap has been invigorating sales with more brightly colored clothing, designer collaborations and livelier stores.
For the third quarter, which ended Nov. 2, net sales increased 3 per cent to $3.98 billion. Revenue at stores open at least a year rose 1 per cent.
The company’s said that all three of its global brands generated sales gain for October. By division, Gap’s global division posted a 5 per cent increase in revenue at stores open at least a year, while Banana Republic’s rose 1 per cent. Old Navy had a 2 per cent increase in revenue at stores opened at least a year.
Gap said it expects earnings per share for the third quarter to be in the range of 70 cents to 71 cents. That’s above Wall Street analysts’ previous prediction of 66 cents per share, according to FactSet estimates.
Gap is expected to report its final third-quarter results Nov. 21.
Shares of the company surged nearly 8 per cent to $40.75 in after-hours trading Thursday after the results were announced. During regular trading, the stock fell 27 cents to $37.75.
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