During the fiscal third quarter, ending Oct. 28, Gap generated sales of $3.84 billion, up 1% year over year and ahead of the consensus estimate of $3.76 billion, according to analysts surveyed by FactSet. Same-store sales grew 3%. Earnings of 58 cents per share also exceeded the expected 54 cents per share.
At Old Navy, Gap's strongest franchise, sales grew 4%, the same amount as they did in the third quarter 2016. Gap brand sales grew 1%, up from a 4% decline last year, while sales of another division, Banana Republic, fell 1%, an improvement from the 6% decline last year.
The San Francisco-based retailer also increased its full-year earnings guidance of $2.08 to $2.12 to share, up from $2.02 to $2.10.
The results follow Gap's announcement of an ambitious restructuring plan at the Goldman Sachs Retailing Conference on Sept. 6, in which company CEO Art Peck outlined plans to double down on its Old Navy and Athleta brands, while scaling back its Gap and Banana Republic brands. The company intends to close 200 "underperforming" Gap and Banana Republic stores, or about 10% of its total locations, and add 270 Old Navy and Athleta stores through 2020.
"We continue to make progress against the balanced growth strategy we outlined in September, driving efficiency at our more mature brands, while growing our footprint in the value and active space, and investing in our online and mobile experience," Peck said in a statement.
Gap shares rose 5.7% to $29.05 in after-hours trading. Shares are up 22.5% this year, ahead of the S&P's 14.6%.
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