Gap Shares Surge After 3Q Earnings Exceed Estimates

NEW YORK, United States — Gap Inc. shares rose as much as 6.1 percent in late trading after preliminary third-quarter earnings topped analysts' estimates, helped by cost cuts and a tax gain.

Profit was 78 cents to 79 cents in the period, up from 72 cents in the year-earlier period, the San Francisco-based company said today in a statement. Analysts projected 74 cents, the average of estimates compiled by Bloomberg. Gap will report the official results on Nov. 20.

Lower operating expenses and a tax benefit of about 6 cents a share bolstered profit last quarter, helping make up for a slump at its flagship chain. Same-store sales at the Gap division fell 7 percent in October, compared with 5 percent growth a year ago. Old Navy was little changed last month, while Banana Republic's sales dropped 2 percent.

“While we were disappointed in our October sales results, particularly at Gap, we look forward to presenting our improved product collections for the holiday season across all our brands,” Glenn Murphy, the company’s chairman and chief executive officer, said in the statement.

Shares of Gap, the largest U.S. retail chain focused on apparel, rose as high as $40.20 in extended trading after the results were released. The stock had fallen 3 percent this year through the close of trading today.

Murphy, 52, announced last month that he will be stepping down as CEO in February. He’ll hands the reins to Art Peck, who serves as president of Gap’s growth, innovation and digital unit.

By Nick Turner; editor: James Callan.