Gap Earnings Beat Expectations; Shares Jump

CNBC.com and Reuters

Gap reported better-than-expected earnings Thursday, easily beating Wall Street expectations. Shares of the company rose in late trading.

Gap Store
Richard Faulder

The clothing retailer, based in San Francisco, said it earned 36 cents per share, against 33 cents a share a year ago.

Sales for the second quarter came in at $3.32 billion, versus sales of $3.2 billion in the same period last year.

Analysts who follow the company had expected earnings of 35 cents per share on revenue of $3.3 billion.

The company also reported that same-store sales were down 4 percent at Gap North America but were up 3 percent at Banana Republic North America, compared to a 15 percent decline a year ago. Sales at Old Navy rose 2 percent, compared to a 4 percent fall a year ago.

Inventory per square foot was up 12 percent at the end of the quarter, compared to a year earlier, and the company said it expects inventory to be up by a "high single digits" percentage at the end of the third quarter, portending an increase in price cuts.

Gap's board authorized a new $750 million share buyback. During the first half of the year, Gap spent $1.1 billion buying back stock.

Gap, the largest mall-based apparel chain in the U.S., is typically watched as an indicator of the optimism of the U.S. consumer.

Shares of the company , which closed more than 1 percent lower in regular New York trade, were higher in extended trading. Get after-hours quotes for Gap here.