Gap shares rise 7% after company sales hit $4 billion

The shares of Gap Inc. rose 7% in Thursday’s extended session after the retailer reported sales of $4 billion, mainly thanks to the Old Navy and Athleta brands, and profits that beat Wall Street expectations, leading to an increase in the outlook for the year .

gap gps,
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said it made $258 million or 67 cents a share in the quarter, as opposed to a loss of $62 million or 17 cents a share in the same period a year ago. Adjusted for one-off items, Gap earned 70 cents per share.

Revenue rose 29% to $4.2 billion, the highest second-quarter revenue in more than a decade, Gap said. Sales were 5% higher than in the second quarter of 2019, the company said.

The FactSet consensus called for earnings per share of 46 cents per share on revenue of $4.1 billion.

Net sales for the Old Navy and Athleta brands were up 21% and 35% compared to 2019, while net sales at Gap and Banana Republic were down 10% and 15%, also compared to 2019, Gap said. Online sales increased 65% in the quarter from the quarter of 2019, representing 33% of the company’s total revenue.

“Increased marketing investments, improved brand management and technology improvements are paying off as our brand strength wears off,” Chief Executive Sonia Syngal said in a statement.

Gap increased earnings per share for the full year to a range between $1.90 and $2.05, and adjusted earnings per share between $2.10 and $2.25. It called for about 30% sales growth for the year.

Gap said earlier Thursday that it had acquired Drapr, an e-commerce startup and online application that allows people to virtually try on clothes. The terms have not been disclosed.

“Drapr is designed to help customers find the best clothing size and fit for their personal style and body type, while helping retailers reduce unnecessary returns,” said Gap. “We plan to use Drapr to help Gap Inc. improve the fit experience for our customers and accelerate our ongoing digital transformation.”

Gap stocks are up nearly 31% this year, compared to a roughly 19% rise for the S&P 500 index SPX,
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