SAN FRANCISCO, United States — Gap Inc.’s value-focused Old Navy chain is fuelling investor optimism that the retailer still has a place in shoppers’ hearts and wallets heading into the all-important holiday season.
The largest US apparel-focused retailer posted third-quarter earnings that topped analysts’ estimates as comparable sales — a key measure — grew at both Gap’s Old Navy discount brand as well as its flagship brand. It marks the first time in 15 quarters that the company’s namesake brand has posted positive same-store sales.
“We continue to make progress against the balanced growth strategy we outlined in September,” chief executive Art Peck said in a statement.
The results show that some apparel chains may be bucking the downward trend permeating the mall. Peck is refocusing the retailer on the newer Old Navy and Athleta brands as consumers have shifted their preferences toward lower-priced and athletic apparel. In the meantime, Gap is shutting stores and cutting costs.
The shares rose as much as 11 percent to $30.53 in extended trading in New York. The stock has gained 22 percent this year through Thursday’s close.
Profit was 58 cents a share in the quarter, excluding some items, the San Francisco-based company said Thursday. Analysts estimated 54 cents a share, on average. The company also raised its outlook for full-year earnings per share to $2.08 to $2.12.
By Lindsey Rupp; editors: Nick Turner, Lisa Wolfson and Jonathan Roeder.