Gap said its sales at stores open at least a year fell 6 percent in December but said merchandise margins were "significantly above" the prior year.
Analysts, on average, had been expecting the San Francisco-based clothing retailer to post a same-stores sales decrease of 2.4 percent, according to Reuters Estimates.
Gap , which runs Banana Republic, Old Navy, and its namesake Gap stores, said total sales for the five weeks ended Jan. 5 fell 6 percent to $2.20 billion from $2.34 billion a year earlier.