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Old Navy Returns to Form in June

Old Navy has ended its streak of poor results.

Gap Inc. shares (GPS) rose more than 7 percent in early trading Friday after the San Francisco-based operator of Gap, Old Navy and Banana Republic reported that net sales for the five weeks ended July 2 rose 2 percent to $1.57 billion.

That increase was mostly down to the fact that total same-store sales were up 2 percent last month, versus a 1 percent decrease in June 2015. Analysts had expected a 3.6% drop.

“We are pleased to see better performance across the portfolio this month, partly driven by an improvement in June traffic trends, particularly at Old Navy,” Sabrina Simmons, chief financial officer, said Thursday.

Indeed, Old Navy led the way. Following several months of missing the mark, sales at stores open at least one year jumped 5 percent versus a 1 percent increase last year. This result was in stark contrast to May, when comps fell 7 percent, not to mention April’s massive 10 percent decline. In fact, in the first quarter of fiscal 2016, Old Navy Global comps were down 6 percent, compared with a 3 percent increase in 2015.

Comps fell at Gap in June but at a slower pace. The company’s namesake brand posted a 1 percent drop, beating the 2.7% decline anticipated by analysts and a vast improvement on last year’s 5 percent drop. But Banana Republic’s slippery downward spiral continued: comps were down 4 percent, compared with 1 percent growth last year.

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