The struggling clothes retailer Gap has said it is "moving in the right direction" after it posted a profit for the August to October quarter, reversing a loss made a year ago.

The results follow last week's announcement that Gap had seen an 11% rise in sales during October at stores open at least a year.

The news will raise hopes that Gap has turned the corner, after a couple of years which have seen sales and profits slide at the group.

Gap enjoyed huge success in the 1990s with its range of classic cotton casuals, but attempts to introduce more trendy designs ended in failure.

The group operates nearly 4,300 stores, including the Banana Republic and Old Navy chains.

Pleasing progress

In September, Gap appointed a new chief executive, Paul Pressler, who was formerly the head of Walt Disney's theme parks and resorts unit.

"We're certainly pleased with our earnings for the quarter and the overall progress we're making in each of our divisions," Mr Pressler said.

"Gap, Banana Republic and Old Navy are each moving in the right direction."

The company reported net earnings of $135.3m for the quarter, up from a net loss of $179m in the same period last year.

Sales rose to $3.6bn, compared with $3.3bn in 2001.

The rise in same-store sales during October had been the first such increase for two years.

But Gap warned that it was too early to herald a recovery.

"October performance significantly exceeded our expectations," said chief financial officer Heidi Kunz.

"However, our outlook remains cautious until we see more consistent performance in our business over time."