Gap Inc (NYSE:GAP) stock rose10.34% (As on November 22, 12:04:10 AM UTC-4, Source: Google Finance) after the company raised its annual sales forecast, signaling steady demand for the Old Navy parent’s casual wear apparel, as the holiday season approaches. With shoppers budgeting to purchase trendy styles, Gap’s strategy of paring back discounts and stocking fresher, popular items in its stores has helped the company appeal to a broader customer base. The company raised its gross margin expansion target for the year by 20 basis points, after reporting a 140 basis point increase in gross margin for the quarter ended Nov. 2. Store sales decreased 2 percent in the third quarter and the company ended the quarter with 3,603 store locations in about 40 countries, of which 2,544 were company operated. Online sales increased 7 percent compared to last year and represented 40 percent of total net sales. The operating income was 355 million dollars and operating margin reached 9.3 percent. Gap reported net income of 274 million dollars. Gap’s Old Navy brand has also been gaining back lost ground with fresher styles for denim and dresses appealing to customers at full price, with similar gains reflecting in Athleta, its athletic wear unit.

Moreover, Third quarter net sales at Old Navy of 2.2 billion dollars were up 1 percent, while comparable sales were flat. Gap brand net sales of 899 million dollars were up 1 percent and comparable sales were up 3 percent representing the fourth consecutive quarter of positive comparable sales at the brand. Banana Republic net sales of 469 million dollars were up 2 percent but comparable sales were down 1 percent. The brand saw strength in its men’s business during the quarter. Athleta net sales of 290 million dollars were up 4 percent and comparable sales were up 5 percent.

GAP in the third quarter of FY 24 has reported the adjusted earnings per share of 72 cents, beating the analysts’ estimates for the adjusted earnings per share of 58 cents, as per data compiled by LSEG. The company had reported the adjusted revenue growth of 2 percent to $3.8 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue of $2.47 billion. The comparable sales were up 1 percent year-over-year.

Gap now expects full-year 2024 net sales to rise between 1.5% and 2%, compared with its earlier target of marginal growth, approximate 220 bps expansion in gross margin and operating income between mid to high 60 percent growth range.