Gap Shares Surge as Same-Store Sales Rise

Gap Inc. shares surged as much as 9 percent after hours on Thursday following its report that same-store sales surpassed expectations.

Gap name and sign

Old Navy, Gap’s less expensive nameplate, experienced a rise in sales in the last period. More shoppers making purchase boosted total sales. Old Navy has been notably the biggest revenue contributor for the company.

Gap also raised its earnings position for the full year, pointing to momentum heading into the holidays as reason.

“We continue to make progress against the balanced growth strategy we outlined in September, driving efficiency at our more mature brands, while growing our footprint in the value and active space, and investing in our online and mobile experience,” said Gap CEO Art Peck.

Analysts’ estimates based on a survey only amounted to 54 cents earnings per share. But Gap’s report of earnings per share for the fiscal third quarter outpaced them and reached 58 cents.

Total sales rose for about 1 percent, reaching $3.84 billion, compared from the $3.80 billion a year ago. Analysts’ estimates for sales were only at $3.76 billion.

Gap’s total same-store sales surged for the fourth consecutive quarter. This shows how the retailer’s improvement efforts are paying off in the middle of a riotous environment.

The key metric rose by 3 percent, compared with the expected growth of 1 percent. This total was the result of a 4 percent increase at Old Navy, a 1 percent increase at Gap stores, and a fall of 1 percent in the retailer’s Banana Republic division.

Gap is now expecting adjusted earnings per share to be within $2.08 to $2.12 for the full year. The company was previously looking at fiscal 2017 earnings of $2.02 to $2.10 per share.

Gap shares rose more than 22 percent in 2017 as of Thursday’s market close.

L Brands Shares Drop; Victoria’s Secret Continues Struggle

Victoria's Secret shop


On the other hand, shares for L Brands fell about 6 percent before the opening bell on Thursday as it continues to struggle with its Victoria’s Secret business.

Weakness in Victoria’s Secret has been growing with the once high-flying brand now competing against new competitions such as American Eagle’s Aerie. The brand has also been affected badly by a fall in mall traffic.

Victoria’s Secret’s comparable-sales dropped 4 percent during its third-quarter.

“We believe fundamental issues remain at Victoria's Secret ... and L Brands can no longer rely on this division as a source of stability,” said analyst, Randal J. Konik.

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Gap Shares Surge as Same-Store Sales Rise Gap Shares Surge as Same-Store Sales Rise Reviewed by HQBroker on November 17, 2017 Rating: 5

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