Gap Q3 2025 earnings

clothing retailer Openness It said Thursday that comparable sales rose 5% in its fiscal third quarter, driven by strong revenue from the same brand after it went viral. “Better in denim” campaign with girl group Katseye.

Leaving aside pandemic-related spikes, the rise in comparable sales is the strongest growth for Gap since the fiscal 2017 holiday quarter, well ahead of Wall Street’s expectations of 3.1%, according to StreetAccount.

In an interview with CNBC, CEO Richard Dickson said the company doesn’t need to give discounts as often to sell products, is gaining customers from all income brackets, and is seeing a “great start” to the holiday shopping season.

“While external data points to macro pressure, especially on low-income consumers, our customers are finding our price value, [and] Our styles transcend the competitive landscape,” Dickson said. “Our product resonates. “That’s why we’re so confident heading into the holiday season.”

Gap shares rose 5% in extended trading Thursday.

Here’s how the largest specialty apparel company in the U.S. performed during the quarter compared to Wall Street’s expectations, according to a survey of analysts by LSEG:

• Earnings per share: 59 cents expected versus 62 cents
• Revenues: 3.94 billion dollars, while the expectation was 3.91 billion dollars

The company’s net income for the three months ended Nov. 1 fell nearly 14% to $236 million, or 62 cents per share, compared with $274 million, or 72 cents per share, a year ago.

Sales rose 3% to $3.94 billion from $3.83 billion a year earlier.

For Gap’s fiscal year, which is scheduled to end in early February, the company expects sales to increase between 1.7% and 2%, in line with analyst expectations, heading towards the high end of previously announced sales forecasts. Previously, sales were expected to increase between 1% and 2%.

The company now expects full-year operating margin to be around 7.2%, compared to the previous range of 6.7% to 7%. The forecast also includes the impact of tariffs, which is estimated to be between 1 and 1.1 percentage points.

Comparable sales across Gap, which owns the eponymous Old Navy, Athleta and Banana Republic, have been positive for seven consecutive quarters. Under Dickson, the company has focused on improving profitability and stabilizing operations as well as on revitalizing cultural fit that has led to continued sales growth across the portfolio.

Gap’s profitability was also improving as a result, but now that it’s facing tariffs, the retailer’s gross margin and net income are taking a hit. During the quarter, Gap’s gross margin fell 0.3 percentage points to 42.4%, but still beat expectations of 41.2%, according to StreetAccount.

The 14% drop in Gap’s net income was primarily related to tariffs, finance chief Katrina O’Connell said in an interview.

Gap’s better-than-expected results came as apparel sales across the industry remained generally soft and consumers gave up on nice-to-haves like new clothes instead of necessities.

As well as players with net worth Walmart And TJX CompaniesEarnings so far this season have eroded, with some companies blaming macroeconomic conditions and remaining cautious about the holiday season.

Gap’s diverse portfolio gives it protection during uncertain economic times because it can capture shoppers from different locations, Dickson said.

“Our portfolio appeals to a wide range of consumers, which gives us great flexibility in today’s environment,” Dickson said.

Let’s take a closer look at the performance of each of the company’s brands:

The brand, which bears Gap’s name, has been the focus of Dickson’s turnaround strategy since he took office. He started as CEO just over two years ago.