Shares of Gap (GPS) surged 7% Friday morning after revealing October same-store sales growth that more than tripled forecasts and projecting a third-quarter earnings beat.
The apparel maker’s results set a positive tone ahead of the crucial holiday-shopping season and come despite concerns about consumer confidence in the wake of the recent political fights in Washington.
After Thursday's closing bell, Gap said its October same-store sales, which measure sales at stores open at least a year, jumped 4%. Analysts had called for a much more modest increase of just 1.2%.
"All three of our global brands delivered positive comps for October," Gap CEO Glenn Murphy said in a statement.
The company’s namesake brand enjoyed a 5% increase in October same-store sales, up from 3% growth the year before. Old Navy same-store sales increased 2%, compared with 5% in the year-earlier period. Banana Republic sales were up just 1%, slowing down from 5% last year.
For the third quarter, same-store sales inched up 1%, down from a 6% leap the year before, due to flat Old Navy sales and a 1% dip in Banana Republic sales.
Gap management sees third-quarter EPS of 70 cents to 71 cents, up from 63 cents the year before and above the Street’s view of 66 cents. The company also reaffirmed its guidance for inventory dollars per store to be up in the mid-single digits.
Wall Street cheered the guidance and October results, driving the San Francisco-based company's shares 6.75% higher to $37.75 in premarket trading Friday morning. Gap has rallied 21.6% so far this year.