Submitted by Fox First at Ten on November 15th
NEW YORK (AP) - Gap Inc. raised its outlook for the year after reporting bigger third-quarter net income that beat Wall Street expectations on Thursday.
The San Francisco-based clothing retailer said an uptick in sales at its Banana Republic, Old Navy and namesake stores helped lift its net income by 60 percent for the period. The performance is the latest sign that the company may be in turnaround mode, fueled by strong marketing and a revamping of its products.
CEO Glenn Murphy said in a conference call with analysts that Gap was continuing its transformation from an "American-centric" company to more of a global brand. For example, the company opened its first Gap Outlet store in China and an online business in Japan during the quarter.
Last month, Gap also announced a management overhaul aimed at enabling it to respond more quickly to changing tastes around the world. The change, to take effect in February, will put the North American, international, online, outlet and franchise divisions under a single global executive for each of the company's brands. The company is also forming a new innovation and digital strategy team to further advance its efforts in that area.
For the quarter, the company said revenue at stores open at least a year for the period rose 6 percent in North America. The figure is a key measure of a retailer's health, because it excludes the volatility of newly opened and closed locations. The figure rose 7 percent at Gap, 6 percent for Banana Republic and 9 percent for Old Navy, after each of the brands logged declines in the year-ago period.
Net sales for the online division rose by 23 percent to $509 million. International sales rose by 7 percent.
Murphy said the results highlight how its lineup is resonating with customers.
"We are ready to compete and win this holiday season as we drive to build upon our top line growth," Murphy said.
For the three months ended Oct. 27, the company said it earned $308 million, or 63 cents per share. That's compared with $193 million, or 38 cents per share, in the year-ago period. The per-share results got a 2-cent boost from a reduction in the number of outstanding shares.
Total revenue rose 8 percent to $3.86 billion, from $3.59 billion last year.
Analysts, on average, expected a profit of 62 cents per share, on revenue of $3.84 billion, according to FactSet.
The company now expects earnings per share of $2.20 to $2.25 for the full year, up from the previous forecast of $1.95 to $2 per share. Wall Street was forecasting $2.25 per share, on average, with estimates ranging from $1.85 to $2.38.
Gap shares rose $1.22, or 3.7 percent, to $34.48 in after-hours trading.
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