Gap posts surprise same-store sales rise as Old Navy shines

Gap Inc reported a surprise rise in quarterly same-store sales on Thursday, the latest indication that the apparel retailer is gaining from its turnaround plan. The company's shares were up 3.9 percent at $24.1 in trading after the bell.

Gap's sales have been buoyed by robust performance of Old Navy, with the pocket friendly brand's comparable sales rising 8 percent and handily beating Consensus Metrix's estimate of a 2.2 percent rise. The company's results are a bright spot in an otherwise gloomy apparel retail industry, which has been hit hard by the growing popularity of online shopping.

Earlier in the day, Ralph Lauren Corp reported its ninth straight fall in quarterly sales at established stores, and on Wednesday American Eagle Outfitters Inc forecast second-quarter profit below estimates.

Gap has been reining in costs, shuttering underperforming stores in North America and overseas and building up its e-commerce capacity. However, Banana Republic continued to be a drag, with quarterly sales decreasing 6 percent and comparable sales falling 4 percent. Sales at the company's namesake Gap brand fell 5.3 percent to $1.16 billion.

The company ended seven straight quarters of sales declines in the fourth quarter, with sales rising 1 percent. The company on Thursday backed its 2017 comparable sales forecast of flat to up slightly. Gap's net income rose to $143 million, or 36 cents per share, in the first quarter ended April 29 from $127 million, or 32 cents per share, a year earlier.

Same-store sales rose 2 percent in the quarter. Analysts on average had expected a 0.2 percent fall, according to Consensus Metrix. Revenue was flat at $3.44 billion.

Analysts on average had expected a profit of 29 cents per share and revenue of $3.39 billion, according to Thomson Reuters I/B/E/S.