Gap Inc (NYSE:GPS) unveiled quarterly sales that surpassed market forecasts as it released new styles and improved its online offerings.
Overall same-store sales rose 5% in the fourth quarter, ahead of expectations for a 1.2% rise.
Comparable sales at Old Navy, the fashion retailer’s lower-priced line of clothing, increased 9%, beating the 3.4% rise expected by research firm Consensus Metrix.
Gap has recently relied heavily on Old Navy to drive sales with its other brands Banana Republic and Gap lagging behind.
However, Banana Republic delivered a surprise 1% rise in comparable store sales during the quarter while same-store sales at Gap were flat, compared to a forecast for a 0.5% decline.
Excluding certain items, Gap earned 63 cents per share in the fourth quarter, exceeding estimates of 58 cents per share.
For 2018, the company expects earnings per share of US$2.55 to US$2.70 and comparable sales to be flat to “up slightly”.
Gap said it would raise 2018 dividend by 5% to US$0.97 per share.
“Our outlook for 2018 demonstrates confidence in our strategy and a meaningful step up in earnings capacity for the company,” said chief executive Art Peck.
Shares rose 5.7% to US$33.29 each in US morning trade.