Gap posts surprise same-store sales rise as Old Navy shines

Reuters News
Posted: May 18, 2017 4:28 PM

(Reuters) - Gap Inc <GPS.N> reported a surprise rise in quarterly same-store sales on Thursday, the latest indication that the apparel retailer is gaining from its turnaround plan.

The company's shares were up 3.9 percent at $24.1 in trading after the bell.

Gap's sales have been buoyed by robust performance of Old Navy, with the pocket friendly brand's comparable sales rising 8 percent and handily beating Consensus Metrix's estimate of a 2.2 percent rise.

The company's results are a bright spot in an otherwise gloomy apparel retail industry, which has been hit hard by the growing popularity of online shopping.

Earlier in the day, Ralph Lauren Corp <RL.N> reported its ninth straight fall in quarterly sales at established stores, and on Wednesday American Eagle Outfitters Inc <AEO.N> forecast second-quarter profit below estimates.

Gap has been reining in costs, shuttering underperforming stores in North America and overseas and building up its e-commerce capacity.

However, Banana Republic continued to be a drag, with quarterly sales decreasing 6 percent and comparable sales falling 4 percent.

Sales at the company's namesake Gap brand fell 5.3 percent to $1.16 billion.

The company ended seven straight quarters of sales declines in the fourth quarter, with sales rising 1 percent. The company on Thursday backed its 2017 comparable sales forecast of flat to up slightly.

Gap's net income rose to $143 million, or 36 cents per share, in the first quarter ended April 29 from $127 million, or 32 cents per share, a year earlier.

Same-store sales rose 2 percent in the quarter. Analysts on average had expected a 0.2 percent fall, according to Consensus Metrix.

Revenue was flat at $3.44 billion.

Analysts on average had expected a profit of 29 cents per share and revenue of $3.39 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Arunima Banerjee in Bengaluru; Editing by Anil D'Silva)