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Gap raises outlook after stronger second quarter

Gap, the largest US mall retailer, provides key insight into spending.

Associated Press/File

Gap, the largest US mall retailer, provides key insight into spending.

NEW YORK — Gap raised its earnings outlook for the year on Thursday, after its summer lineup helped boost second-quarter results and advanced its turnaround push.

The higher guidance fell short of Wall Street expectations, but the company also raised its annual dividend by 20 cents, or 33 percent, to 80 cents per share. Its shares rose 1 percent to $42.43 after hours.

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Gap Inc., which is based in San Francisco, owns the Banana Republic, Old Navy, Piperlime, Athleta, and Intermix stores, in addition to its namesake chain. The company is the nation’s largest mall-based clothing chain operator, and its results provide insight into consumer spending.

Gap has been invigorating sales with more brightly-colored clothing, designer collaborations, and livelier stores. Last October, the company also announced a management overhaul to help it respond more quickly to shifting tastes around the world.

Gap’s more upbeat outlook represents a bright spot in the broader industry. Major retailers including Walmart Stores Inc., Target Corp., and Macy’s have lowered their expectations for the rest of the year, citing the uncertain economy.

As Gap reported earlier this month, sales at stores open at least a year was up 5 percent for the three months ended Aug. 3. Gains at Gap and Old Navy offset a decline at Banana Republic.

The company earned $303 million, or 64 cents per share, which was on the high end of its latest guidance of 62 cents to 64 cents per share. Analysts on average expected 63 cents per share. A year ago, the company earned $243 million, or 49 cents per share.

Revenue rose 8 percent to $3.87 billion, in line with Wall Street expectations.

Gap now expects to earn between $2.57 and $2.65 per share for the full year, up from the previous forecast of $2.52 to $2.60 per share.

Analysts had forecast earnings of $2.77 per share for the full year, according to FactSet.

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