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Gap shares jump on sales gains, forecast


Gap shares jumped 6 percent Friday after posting surprisingly strong sales for January issuing a bold fourth-quarter outlook.

The San Francisco clothing chain, whose stores include Gap, Banana Republic and Old Navy, reported late Thursday that comparable-store sales rose 1 percent last month. Analysts had expected a drop of 1.3 percent, according to Thomson Reuters.

It was one of a few bright spots in otherwise weak batch of monthly reports from retailers, which largely saw declines in sales at stores open at least a year. That metric is considered a key indicator of a retailer's health as it strips away the volatility of recently opened and closed stores.

Gap also predicted per-share earnings of 65 to 66 cents for the fourth quarter, way better than the 60 cents that analysts were looking for, according to FactSet estimates.

Sterne Agee analysts Ike Boruchow and Tom Nikic said in a research note that the sales report and guidance, in such a tough retail environment, cement Gap's place as an outperformer among its neighbors at the mall. They reiterated a "Buy" rating on the company's stock.

Shares of Gap Inc. rose $2.32 to $42.03 by midday, outpacing broader market gains.


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