Online Sales Lift Gap’s 3Q Profit

Gap (NYSE:GPS) saw its third-quarter profit climb 9.4% amid strong online sales and growth at the retailer’s namesake stores.

The company affirmed its full-year guidance and disclosed a new $1 billion buyback program. An existing share-repurchase plan has about $100 million remaining.

Gap reported a profit of $337 million, up from $308 million in the year-ago period. Per-share earnings rose to 72 cents from 63 cents. Sales improved 3.1% to $3.98 billion.

Wall Street estimates called for earnings of 71 cents a share on revenue of $3.97 billion.

The top line got a big boost from online sales, which surged 20%.

Same-store sales across all brands rose 1%, the seventh consecutive quarter of year-over-year growth. Gap stores were also up 1%, while Banana Republic fell 1%. Old Navy’s same-store sales were flat.

International sales outpaced an increase of 1.5% in the U.S. Sales jumped 11% in Asia, 6.8% in Europe and 3.5% in Canada.

Gap’s gross margin in the latest period narrowed to 40% from 41.2%.

Several national retailers like Best Buy (NYSE:BBY) have warned that margins could be threatened by an increase in promotional activity, an attempt to drive sales during the holiday season.

Shares fell 1.1% to $41.40 shortly after Friday’s opening bell. As of Thursday, the stock was up 32.8% on the year.