What happened

Shares of clothing retailer Gap (NYSE:GPS) jumped as much as 7.9% on Friday following the company's fourth-quarter earnings release. As of 2:01 p.m. EST, the stock was up 7.4%.

Investor optimism toward Gap today likely reflects the company's strong fourth-quarter results, which featured higher-than-expected revenue and adjusted earnings per share. Most notably, Gap's same-store sales growth crushed estimates.

A woman sitting on steps with seven shopping bags

Image source: Getty Images.

So what

For the fourth quarter, Gap posted adjusted earnings per share of $0.63 on revenue of $4.78 billion. On average, analysts were expecting adjusted earnings per share and revenue of $0.58 and $4.67 billion, respectively.

Global same-store sales were up 5% year over year, blowing past a consensus analyst estimate for same-store sales growth of 1.2%.

"Our strong positive comp and margin expansion during the critical holiday quarter affirms our balanced growth strategy," said Gap CEO Art Peck.

Gap's fiscal 2017 operating margin was 9.3%, up from 7.7% in fiscal 2016.

Now what

Gap said it expected full-year 2018 earnings per share to be between $2.55 and $2.70 -- well above the consensus analyst estimate for earnings per share of $2.35. Furthermore, management guided for same-store sales in fiscal 2018 to be "flat to up slightly" even though the fiscal year has 52 weeks compared to fiscal 2017's 53 weeks.

"Our outlook for 2018 demonstrates confidence in our strategy and a meaningful step up in earnings capacity for the company," said Peck.

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