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SAN FRANCISCO, United States — Gap shares jumped 6 percent Friday after posting surprisingly strong sales for January issuing a bold fourth-quarter outlook.
The San Francisco clothing chain, whose stores include Gap, Banana Republic and Old Navy, reported late Thursday that comparable-store sales rose 1 percent last month. Analysts had expected a drop of 1.3 percent, according to Thomson Reuters.
It was one of a few bright spots in otherwise weak batch of monthly reports from retailers, which largely saw declines in sales at stores open at least a year. That metric is considered a key indicator of a retailer's health as it strips away the volatility of recently opened and closed stores.
Gap also predicted per-share earnings of 65 to 66 cents for the fourth quarter, way better than the 60 cents that analysts were looking for, according to FactSet estimates.
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Sterne Agee analysts Ike Boruchow and Tom Nikic said in a research note that the sales report and guidance, in such a tough retail environment, cement Gap's place as an outperformer among its neighbors at the mall. They reiterated a "Buy" rating on the company's stock.
Shares of Gap Inc. rose $2.32 to $42.03 by midday, outpacing broader market gains.
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