Despite some decline on the revenue side, net income at Gap Inc. rose 4.2 percent to $351 million in the third quarter ended Nov. 1, from $337 million in the year-ago period.
Earnings per diluted share were $0.80, versus $0.72 a year ago, representing an 11 percent increase, and a penny above the Wall Street consensus.
Total sales slipped 0.1 percent to $3.97 billion from $3.98 billion a year ago, while comparable-store sales were down 2 percent versus a 1 percent increase last year.
The San Francisco-based specialty retailer cited its growth in China with Gap brand and Old Navy, the expansion of Athleta in the U.S., and stepped up omni-channel services, as highlights.
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By division, comparable-store sales at Gap Global were down 5 percent; Banana Republic was flat, and Old Navy Global was up 1 percent.
Inventory dollars per store were down 2 percent at the end of the third quarter, below previous guidance of being up in the low single digits.
Diluted earnings per share for fiscal 2014 are expected in the range of $2.73 to $2.78, including the gain on a $39 million asset sale.
Operating margin was 13.9 percent versus 14.5 percent in the year-ago quarter. The margin for the full year is seen at 12.5 percent compared to 13.3 percent last year.
Art Peck, who becomes Gap Inc. chief executive officer in February succeeding Glenn Murphy, is already making his mark, promoting two insiders on Thursday to lead two divisions.
Jeff Kirwan, 48, for the past three years president of greater China for Gap Inc., will become global president for Gap brand in December. He succeeds Stephen Sunnucks, who will leave the company on Dec. 19, after steering the growth of the brand to almost 50 countries over the past decade.
Andi Owen, 49, who currently leads the Gap Outlet division, will become global president for Banana Republic on Jan. 5. She succeeds Jack Calhoun, who will depart in February. He led the brand for eight years.
“We’ll start 2015 with a management team comprised of both established executives and the next generation of brand leaders ready for the next generation of customers,” said Peck. He added that there will be transition periods for the executives helping the teams to guide the company through the holiday period.