Gap on Thursday surpassed Wall Street expectations for the second quarter, as a surprise early announcement of its results showed picky shoppers turned to its Old Navy and namesake brands to snap up trendy and fashionable clothing.
Shares of Gap were up 3 per cent after being halted earlier in the day following a Bloomberg News report that said the apparel retailer’s earnings press release and presentation appeared on its website in the morning, hours earlier than scheduled.
A Gap spokesperson told Reuters that the company’s second-quarter 2024 earnings results were briefly and accidentally posted on its website Thursday morning due to an administrative error.
The retailer was originally scheduled to release the results after the bell.
The Banana Republic owner is in the midst of a brand reinvigoration under chief executive officer Richard Dickson and has been ramping up its stores with fresher and more chic styles to bring back lost customers.
People who are otherwise saving dollars and curbing spending on big-ticket items are more than willing to go all out and spend on in-trend footwear and clothing such as those from Abercrombie & Fitch, Roger Federer-backed On and Deckers Outdoor’s Hoka.
“(Gap) is being managed better than it was … it is not like all four brands are really completely healthy, but they are trending in the right direction under the new management,” Morningstar analyst David Swartz said.
Comparable sales at Old Navy rose 5 per cent during the quarter, while the Gap brand posted 3-per-cent growth. Banana Republic sales, however, were flat as the brand continues to focus on fixing the fundamentals and improve its pricing and assortment architecture.
Gap’s second-quarter net sales rose 5 per cent to US$3.72-billion, beating LSEG estimates of US$3.63-billion.
It earned 54 cents a share, also topping analysts’ average estimate of 40 cents.
The apparel retailer reaffirmed its annual net sales forecast and expects gross margin to expand by about 200 basis points versus its prior forecast of at least a 150-basis-point increase.