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Gap Reports Strong Sales for August (GPS)

Clothing chain retailer, Gap Inc. (NYSE: GPS) shares climbed on Thursday after the company reported strong sales in August, beating analysts’ expectations.

For the month of August, Gap’s same-store-sales soared 9%, as back-to-school season saw many buyers heading back to its stores, especially Old Navy. Analysts polled by Thomson Reuters had forecasted same-store-sales growth of 5.4%.

While same-store-sales at Banana Republic climbed 8%, same-store sales at Old Navy soared 12%. In the retail industry, growth in same-store-sales is a perfect gauge on the retailer’s performance since it excludes effects of those stores that were opened less than a year ago or closing stores thereby depicting accurate health of the retailer.

Commenting over the results, Glenn Murphy, chairman and chief executive of Gap Inc., said in a statement, “Our August results underscore our focus to deliver trend-right product supported by great store execution.”

The better-than-expected growth in same-store-sales during the peak “back-to-school” season comes just few days after the release of its fiscal second quarter earnings- which were extremely strong.

The company reported 29% jump in fiscal second quarter earnings even as same-store-sales rose 4% in the period. The strong results are indicative of growing popularity of its brands. Shifting towards a clothing line that appears livelier due to bright colors and trendy designs has helped company to attract more shoppers.

Nevertheless, the company had to toil for regaining shoppers back to its stores. As it struggled to attract shoppers for several years, the company decided to restructure. Accordingly, it brought changes in staff, created new ad-campaigns, and forged partnerships with new designers.  For Instance:  Gap Kids entered in a partnership with Diane Von Furstenberg and Banana Republic’s partnered with AMC’s popular show “Mad Men.”

Just few days ago, the BananaRepublic division also revealed that it has roped in-fashion designer Narciso Rodriguez to act as an adviser for the brand, starting with the fall 2013 collection.

Not surprisingly, company’s shares have soared more than 90%, year-to-date. On Thursday, Gap shares hit a 52-week high, following August sales report and were among the top performers on the benchmark S&P 500 Index.

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