Shares of Gap Inc (NYSE: GPS) surged more than 15% Friday morning after the popular apparel retailer reported quarterly earnings. The company reported that comparable sales for the month of September fell 3%, more than the 1% decrease last year. This is the result of the fire in a building on Fishkill, New York distribution center, and the company has warned that sales will fall as a result.
The good news are September merchandise margin rates, which ended up to be higher than expected, and according to Gap more than offset the estimated decline in earnings from lost in sales.
From the three brands under the Gap umbrella Gap Global, Banana Republic and Old Navy, it is Old Navy that showed growth, a positive 4 percent which includes the estimated negative impact from the Fishkill distribution center fire of approximately 2 percentage points, versus positive 4 percent last year.
Sabrina Simmons, chief financial officer of Gap Inc. said in a statement, "While we remain focused on performance across the portfolio, we are pleased to see a strong customer response to Old Navy’s product assortment, which continues to drive positive momentum at our largest brand,”