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

(Reuters) -Gap on Thursday surpassed Wall Street expectations for the second quarter, after 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 the apparel retailer’s earnings press release and presentation appeared on its website in the morning.

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 posted a 5% rise in comparable sales at Old Navy and 3% growth at its namesake brand during the quarter. Banana Republic sales, however, were flat as the brand continues to focus on fixing the fundamentals and improve its pricing and assortment architecture.

The company’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 net sales and operating expense outlook for fiscal 2024. Gap now expects annual gross margin to expand by about 200 basis points, compared with its prior forecast of at least a 150-basis-point increase.