Gap attributes rise in comparable sales during its third quarter to its viral “Better in Demin” campaign with girl group Katseye.
Comparable sales were up 5% year-over-year and net sales reached US$3.94 billion, marking a 3% rise from last year and beating Wall Street expectations of US$3.91 billion.
"Our strategy is working and our brands are gaining momentum with our three largest brands - Old Navy, Gap, and Banana Republic - each posting strong comparable sales,” Gap CEO and president Richard Dickson said.
When putting aside pandemic-related spikes, this is the strongest growth in comparable sales for the business since 2017 and well ahead of Wall Street Expectations of 3.1% according to Street Account.
Comparable sales for the business have increased for the past seven quarters.
The only Gap brand that didn’t rise in comparable sales was its athleisure brand Athleta, which fell by 11%.
However, despite rising profitability, Gap has also faced difficulty from tariffs, with its gross margin and net profit taking a hit.
The company’s gross margin fell 0.3 percentage points to 42.4%, which is still higher than expectations of 41.2%.
Gap’s net income declined by 14% to US$236 million, which the company’s finance chief Katrina O’Connell attributed to tariffs.
The company also raised its guidance for fiscal 2025.
“The strength of our third quarter and quarter-to-date performance positions us well for the holiday selling season and gives us the confidence to increase our full year net sales outlook to the high end of our prior guidance range and raise our full year operating margin outlook,” Dickson said.
“We are focused on executing with excellence and finishing the year strong."
Gap now expects net sales to rise by 1.7% to 2% instead of between 1% to 2% for the fiscal year.
