Gap Inc shares up as October sales beat Wall St view
NEW YORK (Reuters) - Gap Inc's (GPS.N) October sales surpassed analyst expectations and the clothing retailer forecast quarterly earnings above current Wall Street estimates, sending its shares up nearly 4 percent.
Gap's same-store sales rose 4 percent after plunging 16 percent in October 2008. Analysts had forecast a 1.6 percent rise in same-store sales, according to Thomson Reuters data.
"We're pleased that we grew sales in October while delivering merchandise margins significantly above last year," Chief Financial Officer Sabrina Simmons said in a statement.
Same-store sales rose at the Old Navy and Banana Republic chains in North America, but fell at Gap stores in North America and in the company's international segment. Traffic was down at Gap and Banana Republic, but up at Old Navy.
"Gap Inc.'s October comps were slightly better than our expectation, driven by continued sales momentum at Old Navy, well-positioned as the low-cost provider of apparel for the whole family, and a return to positive comps at Banana Republic," wrote Stifel Nicolaus analyst Richard Jaffe.
Jaffe, who raised his price target on the retailer's shares to $28 from $24, said the Gap division's launch of premium jeans has been well received, and he expects better same-store sales in the fourth quarter.
The retailer said it would kick off Gap's holiday television advertising campaign on November 12, and it will running Old Navy's holiday season TV ads for two weeks longer than it did last year.
It also forecast third-quarter earnings of 42 cents to 44 cents per share, above analysts' average forecast of 38 cents.
Gap shares rose 3.8 percent, or 84 cents, to $22.93 in afternoon trading.
(Additional reporting by Jessica Wohl in Chicago, editing by Maureen Bavdek)