Nov 21 (Reuters) - Gap Inc GAP.N raised its annual sales forecast on Thursday, signaling steady demand for the Old Navy parent's casual wear apparel, as the holiday season approaches.

With shoppers budgeting to purchase trendy styles, Gap's strategy of paring back discounts and stocking fresher, popular items in its stores has helped the company appeal to a broader customer base.

The Banana Republic owner reported sales growth for a fourth consecutive quarter as it executes a turnaround under CEO Richard Dickson, who took on the role in August 2023.

Gap now expects full-year net sales to rise between 1.5% and 2%, compared with its earlier target of marginal growth.

Dickson has emphasized returning to the company's roots as a "pop culture brand," creating marketing campaigns for its casual wear that focus on music and fashion, such as "Get Loose."

The holiday period was off to a "strong start," Dickson said in a statement, after the company's third-quarter net sales rose 2% to $3.8 billion, aligned with estimates.

Gap's Old Navy brand has also been gaining back lost ground with fresher styles for denim and dresses appealing to customers at full price, with similar gains reflecting in Athleta, its athletic wear unit.

The company raised its gross margin expansion target for the year by 20 basis points, after reporting a 140 basis point increase in gross margin for the quarter ended Nov. 2.

Gap earned third-quarter profit per share of 72 cents, compared with analysts' estimate of 58 cents, as per data compiled by LSEG.

Athletic apparel maker Under Armour UAA.N also raised its annual profit forecast earlier in November as CEO Kevin Plank's turnaround plan to offer popular designs at full price helps drive demand.

(Reporting by Juveria Tabassum; Editing by Alan Barona)

((Juveria.Tabassum@thomsonreuters.com))