Apparel retailer Gap Inc's (GPS.N) same-store sales for the holiday quarter blew past Wall Street estimates as shoppers bought more clothing from its major brands, especially Old Navy.

Shares of the San Francisco-based company rose 8.1 per cent to US$34.26 in extended trading on Thursday.

Gap's plan to spend more to bring new styles quicker to stores and improve its online offerings in a bid to fend off competition from fast-fashion chains such as H&M and Forever 21 is paying off.

Same-store sales at Old Navy, which sells lower priced apparel, rose nine per cent, beating the 3.4-per-cent increase forecast by research firm Consensus Metrix.

Overall same-store sales rose five per cent in the fourth quarter ended Feb. 3, while analysts were expecting sales to rise 1.2 per cent.

The company's net income fell to US$205 million, or 52 cents US per share, in the quarter from US$220 million, or 55 cents US per share, a year earlier as it took US$34 million charge due to changes in the U.S. tax law.

Excluding certain items, the company earned 63 cents US per share, beating the average analyst estimate of 58 cents US per share, according to Thomson Reuters I/B/E/S.

Total revenue rose 7.9 per cent to US$4.78 billion, above analysts' estimate of US$4.67 billion.