Gap's sales rise as others warn of spending pullback

The clothing retailer beats projections and trend as Home Depot and Target disappoint.

- BY LILY MEIER

Gap Inc. said its sales came in stronger than expected, bucking the trend across the majority of retail and restaurant chains that have been warning of consumers' deepening caution in recent weeks.

The San Francisco-based chain follows sales beats by Walmart Inc., Ross Stores Inc., and TJX Cos., the discounter that owns TJ Maxx and Marshalls, showing that chains can still win over consumers despite their deepening caution as long as they nail execution.

Many of them cited success appealing to higher-income consumers coming for good deals. For TJ Maxx and Ross, the treasure hunt experience has been particularly resonant at a time when discounts have dropped across the industry. Likewise, Walmart's been able to appeal to more affluent shoppers with online services, fast deliveries and expansive digital offerings that now include luxury items like preowned Chanel bags and other accessories.

In Gap's case, celebrity-fueled marketing, flashy collaborations and revamped inventory are bringing more consumers in the door and helped push comparable sales 5% higher in the third quarter. The shares rose as much as 7.5% in premarket trading on Friday.

Careful spending