(Adds background, analyst comment, updates shares)
Jan 5 Gap Inc reported a surprise rise
in December comparable sales, and said it expected 2016 profit
to be above the higher end of forecast, in sharp contrast to
weak holiday sales from department store operators and some
Shares of the company, which benefited from strong demand
for its Gap and Old Navy brands, were up 8 percent at $25.14 in
after-market trading on Thursday.
The company has been revamping the Gap and Banana Republic
brands, looking to replicate the success of the low-end Old Navy
Comparable sales of its signature Gap brand rose 1 percent
in December, compared with a two percent decline a year earlier.
Old Navy brand sales rose 12 percent, compared with a 7
percent fall a year earlier.
The company's comparable sales rose 4 percent in December,
while analysts on average had expected a 0.7 percent decline.
"If you look back in the past few months, September was down
10 percent, October was down seven and November was down
three... they have actually been working towards improvement,"
Instinet analyst Simeon Siegel told Reuters.
"This is the quarter where they pushed to positive," he
Gap and other traditional apparel chains have been
struggling with the growing popularity of online retailers and
fast-fashion chains such as H&M, Forever 21 and
Inditex's Zara, which are known for offering trendier
clothes at cheaper prices.
Gap, which is also shutting stores and reducing overhead
costs, said it now expected full-year 2016 adjusted profit to be
modestly above the higher end of the previously forecast range
of $1.87-$1.92 per share.
Department store chains Macy's Inc and Kohl's Corp
both cut their 2016 profit forecasts on Wednesday, after
their holiday season sales fell more than expected.
American Eagle Outfitters Inc, which said
fourth-quarter comparable sales to date were flat, said on
Thursday "the holiday sales season was choppy and highly
(Reporting by Gayathree Ganesan in Bengaluru; Editing by Sriraj