Gap Inc. late Thursday surprised Wall Street with a quarterly profit and better outlook, relying on more casual activewear and summer fashions to report sales above forecasts and 8% higher than before the pandemic.

Gap GPS, -4.84% said it earned $166 million, or 43 cents a share, in the first quarter, swinging from a loss of $932 million, or $2.51 a share, in the first quarter of 2020. Adjusted for one-time items, Gap earned 48 cents a share.

Sales hit $4 billion, rising 89% as compared with 2020 sales, and up 8% as compared with the 2019 pre-pandemic quarter, the company said.

Analysts polled by FactSet expected the retailer to report an adjusted loss of 5 cents a share on sales of $3.44 billion.

There was “particular strength at Old Navy and Athleta, a healthy and growing Gap business in North America, and market share gains that outpaced the industry,” Chief Executive Sonia Syngal said in a statement.

Store traffic returned, and Gap enjoyed 82% online growth compared with 2019, she said.

While activewear and fleece “continue to soar, we saw a resurgence in summer fashion, with dresses rebounding, showing that customers are
emerging from the crisis wanting to express their style without sacrificing the comfort and digital convenience they’ve become accustomed to,” she said.

First-quarter comparable-store sales rose 28% year-on-year, and 13% compared with 2019, the company said.

Gap raised its guidance for full-year sales, operating margin and per-share earnings, calling for sales growth around the low- to mid-20% range as compared with 2020. It forecast EPS between $1.55 and $1.70 for the year, and adjusted EPS between $1.60 and $1.75.

Shares of Gap rose 0.2% in the extended session, having ended the regular Thursday session up 3.3%. The stock turned lower, however, shortly after the report came out. Gap shares have gained 74% so far this year, compared with 12% for the S&P 500 index SPX, +0.08%.

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