Gap has exceeded Wall Street expectations for third-quarter comparable sales, supported by strong, marketing-led demand for apparel across its Old Navy and Banana Republic brands despite ongoing economic uncertainty.
The retailer has leaned heavily on cultural and entertainment collaborations, introducing limited-edition ranges tied to Disney, Stranger Things, and Wicked. These partnerships have helped attract shoppers at a time when US consumer spending remains constrained by stubborn inflation and unpredictable trade policy under the Trump administration.
Gap has also invested in campaigns including “Better in Denim”, featuring global girl group Katseye, alongside “Feels Like Gap” and “Get Loose with Troye Sivan”. According to the company, these initiatives have strengthened brand relevance among Gen Z shoppers.
The business is preparing to launch an affordable beauty and personal care line this autumn as it looks to diversify its offering beyond apparel.
Gap reiterated its expectation that tariffs will impact its annual operating margin by 100 to 110 basis points. As of 2024, less than 10% of its merchandise is sourced from China, with combined sourcing from Mexico and Canada accounting for under 1%. Chief executive Richard Dickson had previously stated that the company expects its reliance on China to fall to below 3% by the end of 2025.
For the quarter to 1 November, comparable sales rose 5%, ahead of analyst forecasts of 3.26% growth, according to LSEG data. Comparable sales increased 6% at Old Navy, 7% at the Gap brand, and 4% at Banana Republic. Athleta, however, continued to struggle, with comparable sales dropping 11%, marking a fourth consecutive quarterly decline. The company said the brand is narrowing its product assortment to refocus on high-demand women’s activewear.
Gap’s quarterly revenue rose 3% to US $ 3.94 billion, slightly outperforming expectations of US $ 3.91 billion.
