Summary of Gap’s Q3 2025 Performance
Gap Inc. reported a 5% increase in comparable sales for its fiscal third quarter, significantly exceeding Wall Street’s expectation of 3.1%. The turnaround was fueled by the success of its "Better in Denim" campaign featuring girl group Katseye. CEO Richard Dixon expressed optimism about the upcoming holiday season, noting that the company is successfully attracting customers across various income levels without relying heavily on discounts.
Financial highlights include earnings per share of 62 cents, surpassing the 59-cent forecast, and revenue of $3.94 billion, slightly above expectations. However, net income fell nearly 14% to $236 million due to tariff impacts. Despite these challenges, Gap’s operating margin outlook improved to 7.2%. The positive performance marks seven consecutive quarters of sales growth for the company.
Sales performance among Gap’s brands varied:
- Gap Brand: Comparable sales rose 7%, driven by effective marketing and product consistency.
- Old Navy: Sales increased 5% to $2.3 billion, with comparable sales up 6%, surpassing expectations.
- Banana Republic: Revenue grew 1%, and comparable sales rose 4%, reflecting ongoing recovery efforts.
- Athleta: Sales and comparable sales decreased by 11% to $257 million, prompting concerns about the brand’s future.
Overall, while Gap faces external economic pressures, its diversified portfolio positions it favorably in a challenging retail landscape.
