(Reuters) -Gap raised its annual sales forecast and its first-quarter results beat market expectations, boosted by strength in its Old Navy and Gap brands as budget-strained Americans snap up its trendy denim bottoms and active wear apparel.
Shares of the company surged 15% after the bell as the Banana Republic owner saw strong spring shopping, similar to mall-based retailers like Abercrombie & Fitch, which had also hiked its annual sales goal.
Gap’s quarterly store sales jumped 3% from a year ago as it has been expanding its store presence, while online sales rose 5% to account for 38% of the total sales.
Gap also lifted its fiscal 2024 margin forecast to at least 150 basis points growth compared with a prior target of as much as 50 bps expansion.
It now sees annual sales to be up slightly from last year and compared with prior expectations of roughly flat sales.
First-quarter gross margin jumped 410 basis points to 41.2%. Analysts had expected margin of 38.54%.
Its net sales for the quarter ended May 4 rose 3% to $3.39 billion, edging past analysts’ average estimate of a 0.3% rise to $3.29 billion. Comparable sales rose 3% from a year ago and compared with expectations of 0.9%, according to LSEG data.
It earned 41 cents per share.
Peer American Eagle Outfitters had on Wednesday missed quarterly revenue estimates as sticky inflation hurt demand for its clothing and accessories.
(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)
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