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(GPS) - Get Gap Inc. (The) Report

beat Wall Street's second-quarter forecasts, receiving a boost from its Old Navy chain. But inventory levels are headed higher, which could signal aggressive promotions for fall.

During the quarter, the specialty retailer earned $234 million, or 36 cents a share, compared with $228 million, or 33 cents, for Gap in the year-ago period.

Gap's revenue rose to $3.32 billion from $3.24 billion, while same-store sales declined 4% at namesake stores, grew 3% at Banana Republic and were up 2% at Old Navy.

Analysts were calling for a profit of 35 cents on revenue of $3.31 billion.

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Gap reiterated its full-year outlook in the range of $1.77 to $1.82 a share, which would be a 12% to 15% increase from last year. Wall Street is looking for a profit of $1.79 a share.

Gap warned that its inventory levels are building, as inventory per square foot climbed 12% by the end of the second quarter. It predicts inventory will rise in the high single-digits by the end of the third-quarter. This could mean deeper discounts during the all-important fall and back-to-school selling season.

The company also announced a new $750 million share repurchase program.

Shares of Gap are advancing 2.5% to $18.15 in after-hours activity.

-- Reported by Jeanine Poggi in New York.

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