GPS Gap Inc

By Josh Beckerman 

Gap Inc. posted a surprise 2% comparable-sales increase in June buoyed by strength at its Old Navy brand, following more than a year of monthly declines.

"We are pleased to see better performance across the portfolio this month, partly driven by an improvement in June traffic trends," the retailer said.

In after-hours trading, Gap shares rose 4% to $22.50. Through Thursday's close, the stock is down 22% in the past three months.

The 2% increase is in sharp relief to the 3% drop projected by analysts Thomson Reuters had polled.

The company's namesake brand had a 1% decline in comparable sales, with Banana Republic down 4% and a 5% increase at Old Navy.

Total sales rose to $1.57 billion from $1.54 billion.

Gap's last comparable-sales increase was in March 2015. Gap and other mall-focused chains have been hurt by the rise of online shopping and the popularity of fast-fashion retailers such as H&M operator Hennes & Mauritz AB and Zara owner Inditex SA. Mall-anchored retailers including Aéropostale, Pacific Sunwear of California Inc. and Wet Seal Inc. have filed for bankruptcy protection.

Gap said on May 9 said it was suffering from a "tepid macro environment for apparel retail."

The company previously noted that the timing of Memorial Day would hurt May sales results and help June figures. On Thursday, Gap's recorded sales call said Sunday and Monday of that weekend, included in fiscal June, "provided a strong start" to the month.

Gap has taken steps to streamline its operations, announcing in June 2015 that it would close 175 North American Gap stores and eliminate 250 jobs at its corporate office. This May, Gap said it would close all of its Old Navy stores in Japan and some international Banana Republic locations. Gap has about 3,300 company-operated stores and 450 franchised sites.

Write to Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

July 07, 2016 18:38 ET (22:38 GMT)

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