swung to a profit and topped analysts' recently elevated estimates in the third quarter but said it will remain "cautious" until its businesses produce consistently sound results.
Gap, which also owns Old Navy and Banana Republic, said it earned $135 million, or 15 cents a share, in the quarter ended Nov. 2, compared with a loss of $48 million, or 6 cents a share, before items a year ago. Total sales rose 9% to $3.6 billion. Net income exceeded analysts' 14-cent estimate and sales were slightly higher than forecast.
The company last week said it expected earnings to be 12 cents to 14 cents a share, citing good consumer reaction to its fall clothing line, which produced its first same-store sales gain in two and a half years in October.
"October performance significantly exceeded our expectations," the company said. "However, our outlook remains cautious until we see more consistent performance in our business over time." Analysts are expecting the company to earn 10 cents a share in its fourth quarter.
The company also said it had adjusted several balance sheet items after finding a software upgrade had caused an understatement of its in-transit inventory levels. The restatement affected merchandise inventory and accounts receivable but not net income, sales or cash flow.