Clothing Discounters Offer a Retail Bright Spot

Discount clothing sellers offered investors a rare alternative Thursday to woes in the retail sector, saying bargain-hunting customers are continuing to shop at value-focused stores.

Shares of Ross Stores Inc. and Gap Inc. -- boosted by its discount brand Old Navy -- jumped in post-market trading Thursday after they posted better-than-expected results.

Shares of Gap jumped 6.5%, undergirded by Old Navy, which was the only global brand in the company to post growing same-store sales for the quarter.

Shares of off-price clothing retailer Ross jumped 11% as it saw advancing sales for its latest three-month period, supporting the thinking that while online sellers like have hammered away at traditional retailers, shoppers will still visit brick-and-mortar stores to hunt through bins for deals.

"It's clear to us that the consumer continues to favor retailers that offer compelling value," Ross Financial Head Michael Hartshorn said on a call with analysts.

Gap Chief Executive Art Peck noted on his call that a majority of the company's total business comes from the value segment, including Old Navy and outlet stores. He said the company sees opportunities to invest, particularly in the value space.

A number of other clothing retailers, especially mall-based shops, have struggled in recent years. Shares of L Brands Inc. dropped 3.6% Thursday after the parent of Victoria's Secret cut its earnings forecast late Wednesday.

Same-store sales -- a closely watched metric that tracks sales at established stores that haven't been recently opened or closed -- at Ross climbed 4% from the same quarter a year before. At Old Navy, same-store sales, which includes online sales, climbed 5%, while the metric retreated 1% at the eponymous Gap brand and shrank 5% at Banana Republic.

Earlier this week, TJX Cos, the parent of the T.J. Maxx, Marshalls and HomeGoods off-price chains, said sales excluding newly opened or closed locations rose 3%, extending a string of gains.

At Ross, revenue rose 7.9% to $3.43 billion in the latest quarter as net earnings increased to $316.5 million from $281.9 million a year before. Earnings were 82 cents on a per-share basis, up from 71 cents previously. Analysts polled by Thomson Reuters had expected revenue of $3.37 billion on adjusted earnings per share of 77 cents.

Gap saw revenue fall 1.4% to $3.8 billion, but came in above analysts' expectations of $3.77 billion. Profit increased to $271 million, or 68 cents a share, from $125 million, or 31 cents a share a year before. Gap saw adjusted profit per share of 58 cents, above the 52 cents analysts were expecting.

Write to Austen Hufford at and Ezequiel Minaya at

(END) Dow Jones Newswires

August 17, 2017 19:12 ET (23:12 GMT)