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What: Shares of apparel retailer Gap (NYSE: GPS) climbed 10% on Thursday after its monthly sales and fourth-quarter guidance topped Wall Street expectations.

So what: Gap's January same-store sales declined 3% on heavy clearances, but it was better than the 4.9% drop that analysts had estimated, suggesting that it is finally building some momentum. It's no secret that Gap has struggled in recent years, but a shakeup in management and the institution of a "Global Creative Center" to improve the design process seems to be taking hold.

Now what: Looking forward, management sees fourth-quarter EPS of $0.41-$0.42, which is well above the consensus of $0.35. "January was largely clearance-based, and we're pleased we successfully cleared holiday inventory," said CEO Glenn Murphy. "As we transition to a new year, our teams are focused on making the necessary steps to improve our business performance in 2012." Jumping on a rally isn't exactly ideal, but with the stock still trading at a clear P/E discount to the industry, Gap might have some decent room to run.

Interested in more info on Gap? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Gap. Try any of our Foolish newsletter services free for 30 days.

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