Gap Inc. stock rose more than 6% in the extended session Thursday after the retailer swung to a surprise adjusted profit and reported sales that were slightly above Wall Street expectations for the quarter. Gap
said it lost $49 million, or 13 cents a share, in the fiscal second quarter, contrasting with earnings of $258 million, or 67 cents a share, in the year-ago period.
Adjusted for one-time items, which Gap said excluded inventory and other charges, the company earned 8 cents a share. Sales fell 8% to $3.86 billion, from $4.2 billion a year ago, Gap said. Same-store sales were down 10% year-over-year, including a 15% drop for the Old Navy brand. Analysts expected the retailer to report an adjusted loss of 5 cents a share on sales of $3.82 billion. The retailer had warned in July it was facing margin headwinds as it paid more for shipping and raw materials. At the time, the retailer also announced the departure of Chief Executive Sonia Syngal and announced Executive Chairman Bob Martin as interim CEO. Gap’s second-quarter margins were hit by about $50 million, the company said Thursday, which was in line with its July warning. That was due to rising air-freight costs, higher discounting, mostly at Old Navy, and inflation pushing raw-material costs higher, the company said. Lower discounts at its Banana Republic st …