Gap lifts guidance, touts optimism ahead of crucial holiday shopping season

Investing.com -- Gap lifted its annual guidance and touted optimism ahead of the crucial holiday period following blowout third-quarter earnings underpinned by improved margins.

Gap Inc (NYSE:GAP) jumped more than 13% in afterhours trading following the report.

For the three months to Oct. 28, the San Francisco-based owner of brands like Athleta and Banana Republic reported earnings of $0.72 per diluted share on revenue of $3.8 billion. That compared with analysts estimates for EPS of $0.58 on revenue of $3.81B.   

Same store sales increased by 3%, above estimates for a rise of 2.3%.

Gross margin jumped 140 basis points to 42.7% points versus last year's gross margin.

Looking ahead, the retailer now expects 2024 net sales to be up between 1.5% to 2% from the prior year's $14.9B, compared with a prior forecast for net sales to be up slightly. Gross margins were forecast to expand 220 basis points, up from a prior estimates of 200bps. 

The company also touted optimism ahead of the key holiday shopping season period.

"Holiday is off to a strong start and we remain focused on executing with excellence in the fourth quarter," the company said.