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Net Sales: $3.9 billion, up 3% year over year.

Comparable Sales: Up 5%, highest quarterly comp in over four years.

Operating Margin: 8.5%, down 80 basis points compared to last year.

Gross Margin: 42.4%, declined 30 basis points from last year.

Net Income: Earnings per share of $0.62, a decrease of 14% from last year's $0.72.

Cash and Cash Equivalents: Approximately $2.5 billion, an increase of 13% from last year.

Old Navy Sales: $2.3 billion, up 5% with comparable sales up 6%.

Gap Brand Sales: $951 million, up 6% with comparable sales up 7%.

Banana Republic Sales: $464 million, down 1% with comparable sales up 4%.

Athleta Sales: $257 million, decreased 11% with comparable sales down 11%.

Inventory Levels: Up 5% year over year.

Free Cash Flow: $280 million year to date.

Capital Expenditures: $327 million year to date.

Dividends Paid: $62 million in the third quarter.

Share Repurchases: 7 million shares for approximately $152 million year to date.

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Release Date: November 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Gap Inc (NYSE:GAP) reported third-quarter results that exceeded expectations across multiple measures, including net sales, gross margin, and operating margin.

The company achieved a 5% increase in comparable sales, marking the highest quarterly comp in over four years.

Old Navy, Gap, and Banana Republic all posted strong positive comps, with Old Navy achieving a 6% increase in comparable sales.

Gap Inc (NYSE:GAP) ended the quarter with strong cash balances of approximately $2.5 billion, reflecting financial stability.

The company is successfully executing its brand reinvigoration playbook, resulting in seven consecutive quarters of comp growth for its portfolio.

Athleta experienced a challenging quarter with an 11% decrease in net sales and comparable sales, indicating struggles within this brand.

Gross margin declined by 30 basis points from last year, primarily due to the impact of tariffs.

Operating margin decreased by 80 basis points compared to last year, also affected by tariffs.

Earnings per share decreased by 14% versus last year, primarily due to the impact of tariffs.

The company faces ongoing macroeconomic pressures, particularly affecting the low-income consumer segment.

Q: Can you elaborate on what drove the strong comp acceleration at the Gap banner and your thoughts on sustainable comp levels for the business over time? Also, what surprised you on the upside regarding gross margin? A: Richard Dickson, CEO, explained that the strategy is working, with Gap delivering a standout quarter with a 7% comp increase, marking the eighth consecutive quarter of positive comps. This success is attributed to compelling product assortments, partnerships, and marketing. Katrina O'Connell, CFO, added that gross margin exceeded expectations by over 100 basis points, driven by strong performance at Old Navy and Gap, and better-than-expected AURs due to lower discounting.

Q: How are you managing AUR trends, and what are your growth plans for Q4 and into 2026? A: Richard Dickson stated that they consider various inputs while maintaining the overall value proposition. In Q3, they increased price elasticity and drove full-price sell-through. Select pricing was taken in categories like denim, which saw double-digit growth. The strength of execution resonated with customers, leading to less discounting and better regular price sell-through, giving confidence for continued AUR growth into Q4.

Q: What drove the top-line inflection at Old Navy this quarter, and how do you see Old Navy differentiated in terms of market share opportunity? A: Richard Dickson highlighted Old Navy's strong quarter with 6% comps, consistently gaining market share. The brand's strength lies in offering great style at great value, with healthy growth across all income cohorts. Strategic partnerships and category leadership in kids, baby, denim, and activewear have driven momentum. The brand's expansion into beauty is seen as a high-potential opportunity.

Q: How do you feel about the store fleet across brands, and are there any investments needed for store fleet transformation? A: Richard Dickson emphasized the importance of stores in customer experience. The company is optimizing its retail footprint by closing underperforming stores and repositioning locations. They have been testing new formats and experiences, with positive results from refreshed stores. Investments are being made selectively in areas that drive strong returns.

Q: How are you approaching tariff mitigation strategies, and what is your view on pricing going forward? A: Katrina O'Connell explained that while select pricing was taken in certain categories, the focus remains on maintaining the overall value proposition. The bigger driver of outperformance was less discounting and better regular price sell-through. Richard Dickson added that the company is winning across all income cohorts, with strong differentiation within the portfolio, and is focused on creating great products with exceptional value.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.