GPS Gap Inc

By Josh Beckerman 

Gap Inc., for the second straight month, reported a strong customer response in October to its Old Navy clothing lines but weakness at its namesake chain because of a recent warehouse fire.

In all, the retailer's total same-store sales fell 1% in October, reflecting a negative effect of about 3 percentage points from the August fire at its Fishkill, N.Y., distribution center.

Gap said in prepared remarks, "October merchandise margin rates actualized significantly higher than previously expected, which more than offset the estimated earnings impact from lost sales and increased logistics costs" resulting from the fire.

Gap, which lowered its full-year earnings forecast in August, on Monday said it expects to report third-quarter earnings excluding items of 59 cents to 60 cents a share. The company said third-quarter net sales fell to $3.8 billion from $3.86 billion.

Analysts polled by Thomson Reuters expected earnings of 53 cents a share on revenue of $3.73 billion.

Gap shares rose 2% to $27.50 in after-hours trading.

In October, the Old Navy chain had a 3% same-store sales increase, with declines of 7% at Gap and 4% at Banana Republic.

Gap and other established fashion retailers have been hurt by the popularity of newer brands, such as H&M and Uniqlo, and the move toward online shopping. Gap has responded to a tough environment with store-closing plans and merchandise changes.

Last week, Gap said Chief Financial Officer Sabrina Simmons would leave the company at the end of its fiscal year, after nearly a decade in the role.

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

(END) Dow Jones Newswires

November 07, 2016 18:15 ET (23:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.