Gap’s turnaround efforts drive quarterly results beat in surprise early announcement By Reuters

By Ananya Mariam Rajesh

(Reuters) -Gap on Thursday surpassed Wall Street expectations for the second quarter, as a surprise early announcement of its results showed picky shoppers turned to its Old Navy and namesake brands to snap up trendy and fashionable clothing.

Shares of Gap were up 3%, after being halted earlier in the day following a Bloomberg News report that said the apparel retailer’s earnings press release and presentation appeared on its website in the morning, hours earlier than scheduled.

Gap, which was scheduled to report the results after the bell on Thursday, did not respond to a Reuters request for comment.

The Banana Republic owner is in the midst of a brand reinvigoration under CEO Richard Dickson and has been ramping up its stores with fresher and more chic styles to bring back lost customers.

People, who are otherwise saving dollars and curbing spending on big-ticket items, are more than willing to go all out and spend on in-trend footwear and clothing such as those from Abercrombie & Fitch, Roger Federer-backed On and Deckers Outdoor (NYSE:)’s Hoka.

“(Gap) is being managed better than it was … it is not like all four brands are really completely healthy, but they are trending in the right direction under the new management,” Morningstar analyst David Swartz said.

Comparable sales at Old Navy rose 5% during the quarter, while the Gap brand posted 3% growth. Banana Republic sales, however, were flat as the brand continues to focus on fixing the fundamentals and improve its pricing and assortment architecture.

Gap’s second-quarter net sales rose 5% to $3.72 billion, beating LSEG estimates of $3.63 billion.

It earned 54 cents per share, also topping analysts’ average estimate of 40 cents.

The apparel retailer reaffirmed its annual net sales forecast and expects gross margin to expand by about 200 basis points versus its prior forecast of at least a 150-basis-point increase.