Gap Beats Q2 Estimates, Old Navy Gets New CEO, Shares Surge After Hours

Gap Inc reported its second-quarter financial results after the bell Thursday. Here are the key highlights from the quarter.

Gap shares rose steadily. Why are GAP shares climbing?

Gap Second Quarter Key Metrics

Second-quarter revenue: $3.65 billion, versus expectations of $3.69 billion

Second-quarter adjusted earnings per share: 52 cents, versus expectations of 48 cents

Net sales declined 2% year-over-year, with store sales down 3% and online sales down 1%, with online sales accounting for 35% of total net sales.

Overall comparable sales declined 1%. Here is the comparable sales breakdown by brand.

Old Navy: down 4%

Gap: up 10%

Banana Republic: up 3%

Athleta: down 12%

Gap President and CEO Richard Dickson said: "While second-quarter revenue performance came in slightly below expectations, continued operational and financial discipline drove strong gross margin performance, enabling the company to exceed profit expectations."

"We are especially proud of the momentum at the Gap brand, which delivered double-digit comparable sales growth for the second consecutive quarter. We have work to do at Old Navy, but we have a clear understanding of the factors impacting performance and are taking targeted actions that are already beginning to drive improvements."

Alongside the earnings release, Gap announced a CEO transition at Old Navy. Michael Francis will take over as President and CEO of Old Navy, while Haio Barbeito will transition to an advisory role.

Gap Outlook

Gap expects third-quarter revenue of approximately $3.96 billion to $4.0 billion, versus expectations of $3.98 billion. The company also provided full-year revenue guidance of $15.55 billion to $15.63 billion, versus expectations of $15.53 billion.

Gap raised its full-year adjusted EPS guidance to a new range of $2.35 to $2.45, from a prior range of $2.30 to $2.40, versus expectations of $2.34.

Gap management will further discuss quarterly results on a conference call at 5:00 PM ET.

GAP Shares Jump After Earnings Release

GAP stock price movement: Gap shares rose 11.45% in Thursday's after-hours trading session, trading at $23.17 at the time of writing.