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Gap Q2 Profit Up, Beats View, But Shares Down 7%

Apparel retailer Gap Inc. (GPS), on Thursday reported an increase in profit for the second quarter, as sales increased at Banana Republic and Old Navy brand. Earnings for the quarter trumped Wall Street estimates, while revenues also exceeded expectations.

However, shares of Gap slipped around 7 percent after the company reported that its namesake brake same-store sales dropped 5 percent.

San Francisco-based Gap's second-quarter profit rose to $297 million or $0.76 per share from $271 million or $0.68 per share last year. Analysts polled by Thomson Reuters had a consensus earnings estimate of $0.72 per share for the quarter.

Sales for the quarter increased 8 percent to $4.09 billion from $3.80 billion last year. Analysts had expected revenues of $4.01 billion for the quarter.

Gap's comparable sales for the quarter rose 2 percent, as same-store sales at Gap declined 5 percent, while Banana Republic and Old Navy rose 2 percent and 5 percent, respectively.

CEO Art Peck said, "We delivered our seventh consecutive quarter of positive comparable sales growth, led by the strength of Old Navy.

"The second quarter played out largely as expected, and we are reaffirming our guidance on the year," said Teri List-Stoll, executive vice president and chief financial officer, Gap Inc.

Looking forward to full year 2018, Gap continues to expects earnings of $2.55 to $2.70 per share. Analysts currently estimate earnings of $2.57 per share.

GPS closed Thursday's trading at $32.44, up $0.23 or 0.71% on the NYSE. The stock, however, dropped $2.21 or 6.81% in the after-hours trade.

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