Passers-by walk next to a Gap store in Broomfield, Colorado February 27, 2014. Reuters

The Gap Inc. reported Thursday afternoon that third-quarter earnings rose 11 percent from a year ago to $351 million or 80 cents a share, beating expectations. Analysts polled by Thomson Reuters had expected earnings of 79 cents a share.

The company's stock fell 5 percent to $38.10 in after-hours trading, shortly after the earnings release.

The San Francisco-based retailer, which operates Old Navy and Banana Republic as well as The Gap stores, reported earlier this month third-quarter sales of $3.97 billion, up 1 percent from a year ago and less than the $4.05 billion analysts polled by Thomson Reuters had expected.

"As we move into the holiday season, our teams are focused on delivering unique customer experiences which will differentiate our portfolio of brands in the marketplace,” said Glenn Murphy, The Gap's chairman and CEO, in a statement.

Ahead of the holiday shopping period, Gap is promoting a tech-friendly atmosphere. It has outfitted stores with free Wi-Fi to allow shoppers to browse inventory online with mobile devices, order or reserve an item at another store location or tweet a wish list of items. By Black Friday, customers will be able to reserve up to five items at home online then pick up the items in stores, the company has said. Gap's digital marketing director Art Peck, who will take over as CEO in February, has said he wants to modernize the brand with more mobile and e-commerce options.

The company has also been expanding across China for four years and plans to open Old Navy stores across China and the Middle East next year.