Gap posts strong second quarter results, raises profit forecast; shares jump

(Reuters) - Clothing retailer Gap Inc reported better-than-expected second-quarter results and raised its full-year profit forecast, helped by strong demand for Old Navy products and fewer discounts, and its shares rose about 5 percent.

The company's overall same-store sales increased 1 percent in the three months ended July 29, while analysts were expecting sales to be flat year-over-year, according to research firm Consensus Metrix.

This is the third consecutive quarter that Gap's comparable sales have increased, powered by Old Navy, which sells lower priced apparel.

Same-store sales at Old Navy rose 5 percent, beating analysts' average estimate of an increase of 3.1 percent.

Same-store sales at Old Navy, Gap's biggest revenue contributor, has now increased in seven of the past ten quarters, a bright spot for the company as its Gap and Banana Republic chains struggle.

The company's total revenue fell 1.4 percent to $3.799 billion, just edging past analysts' estimate of $3.77 billion, according to Thomson Reuters I/B/E/S.

Net income rose to $271 million, or 68 cents per share, from $125 million, or 31 cents per share. The latest quarter included a $64 million gain from insurance proceeds, while the year-ago quarter included $135 million in restructuring costs.

Excluding the insurance-related gains, Gap earned 58 cents per share, easily beating analysts' estimate of 52 cents.

Gap raised its adjusted profit forecast for fiscal 2017 to $2.02 to $2.10 per share from $1.95 to $2.05 per share.

The company's shares were up 5.4 percent at $23.90 in trading after the bell on Thursday. They had surged more than 13 percent immediately after Gap issued its earnings report.

(Reporting by Gayathree Ganesan in Bengaluru; Editing by Savio D'Souza)