Gap Inc (NYSE:GPS) shares jumped more than 19% in Friday's early deals, to $16.30, thanks to quarterly sales and profits coming in comfortably above Wall Street expectations.
The clothing retailer - which also owns brands such as Old Navy, Banana Republic and Athleta - reported revenue of $3.77 billion for the three months ended October 28, 2023.
This topped estimates of $3.61 billion but represented a 7% drop year-over-year and included an estimated 2% negative impact from the sale of Gap China.
Sales at Athleta were down 18%, Gap was down 15%, Banana Republic was down 11%, and Old Navy was down 1% compared to the same period in 2022.
Earnings per share declined from $0.77 in the year-ago quarter to $0.58, significantly higher than estimates of $0.20.
“Gap Inc (NYSE:GPS). delivered a solid performance in the third quarter. We were pleased to see market share gains as well as improvements in both gross margins and operating margins, demonstrating our ability to drive operating and financial discipline,” Gap CEO Richard Dickson said in a statement.
For the fourth quarter, Gap expects its sales to be flat to slightly negative compared to the year-ago quarter’s $4.24 billion.
Wall Street analysts had expected a 1.1% increase in sales over 4Q 2022 to $4.29 billion.
The retailer also reiterated its full-year outlook, continuing to expect net sales to be down in the mid-single-digit range compared to fiscal 2022’s net sales of $15.6 billion and gross margin expansion.
In New York, Gap shares rose by 19.24% at US$16.30 ahead of Friday's market open.