Online sales represented a third of Gap’s business
Gap Inc. stock rallied 7% in the extended session Thursday after the retailer reported sales that topped $4 billion, thanks mostly to its Old Navy and Athleta brands, and profit that blew past Wall Street expectations, leading to an increase in guidance for the year.
Gap GPS, 3.17% said it earned $258 million, or 67 cents a share, in the quarter, contrasting with a loss of $62 million, or 17 cents a share, in the year-ago period. Adjusted for one-time items, Gap earned 70 cents a share.
Sales rose 29% to $4.2 billion, the highest second-quarter sales in more than a decade, Gap said. Sales were 5% higher than in the second quarter of 2019, the company said.
FactSet consensus called for EPS of 46 cents a share on sales of $4.1 billion.
Net sales for Old Navy and Athleta brands were up 21% and 35% as compared with 2019, while net sales at Gap and Banana Republic were down 10% and 15%, also compared to 2019, Gap said. Online sales rose 65% in the quarter versus the 2019 quarter and represented 33% of the company’s total business.
“Stepped-up marketing investments, improved brand management, and technology enhancements are paying off as our brand power cuts through,” Chief Executive Sonia Syngal said in a statement.
Gap raised its full-year EPS guidance to a range between $1.90 and $2.05, and adjusted EPS between $2.10 and $2.25. It called for sales growth around 30% for the year.
Gap earlier Thursday said it had acquired Drapr, an e-commerce startup and online application that enables people to virtually try on clothing. Terms were not disclosed.
“Drapr is designed to help customers find the best clothing size and fit for their personal style and body type, while helping retailers reduce unnecessary returns,” Gap said. “We plan to leverage Drapr to help Gap Inc. improve the fit experience for our customers and accelerate our ongoing digital transformation.”
Gap shares have gained nearly 31% this year, compared with an advance of around 19% for the S&P 500 index SPX, 0.79%.