Gap Stock Rises 16% In After-Hours On Beat-and-Raise Q3, CEO Says Holiday Season Off To Good Start: Retailers Cheer

Shares of San Francisco, California-based specialty apparel retailer Gap Inc., ($GAP) rose sharply in Thursday’s after-hours session following the release of better-than-expected third-quarter results.

Gap, which owns the namesake Gap brand, Old Navy, Banana Republic and Athleta, reported a sharp year-over-year (YoY) increase in earnings per share (EPS) from $0.58 to $0.72. The bottom-line results also exceeded the $0.58-per-share consensus estimate.

Revenue rose a modest 1.65% YoY from $3.77 billion to $3.83 billion, roughly in-line with estimates, with comparable sales rising 1%. 

The company said it gained market share across all brands during the quarter, with the metric rising 3% for the Gap brand, and 5% for Athleta. Old Navy’s comps were flat, while Banana Republic’s fell 1%. 

The Old Navy brand accounted for more than 71% of the total sales and Gap brand’s contribution was about 24%.

Online sales, accounting for 40% of the total, climbed 7%.

Both gross profit and operating costs fell YoY, resulting in margin expansion.

CEO Richard Dickson said, "I'm proud that Gap Inc. delivered another successful quarter, growing net sales for the 4th consecutive quarter and gaining market share across all brands while meaningfully expanding operating margin."

The executive also highlighted consistent execution across strategic priorities, including the rigor and repetition the company is applying to its brand reinvigoration playbook.

Gap ended the quarter with cash, cash equivalents and other investments of $2.2 billion, up 64% YoY.

The company said its board approved a quarterly dividend of $0.15 per share.

Looking ahead, Gap raised its full-year net sales, gross margin and operating income growth guidance for the full year, citing its year-to-date performance. CEO Dickson said, "Holiday is off to a strong start and we remain focused on executing with excellence in the fourth quarter."

The company now expects 2024 net sales growth of 1.5%-2.0%, compared to prior expectations of a slight growth. 

Following the quarterly results, Gap was among the top 10 trending tickers on Stocktwits.

GAP sentiment and message volume November 21, 2024, after-hours as of 9:33 pm ET | Source: Stocktwits

Sentiment toward Gap flipped to ‘extremely bullish’ (96/100) from ‘bearish’ (27/100) a day ago, with a perk up in message volume to ‘extremely high.’

Some retailers on the Stockwits platform highlighted Gap’s war-chest.

Another lauded the quarterly results and eyed a spike in the stock price toward $30.

Gap shares closed Thursday’s session up 6.89% to $22.04 and added to these gains in the after-hours trading. It last traded up 15.70% in the after-hours session. The stock has underperformed the broader market this year, rising 8.3% versus the 25% gain for the broader S&P 500 Index. The SPDR S&P Retail ETF ($XRT) has been up 10.1% for the same period.