Gap Inc. posts Q3 comparable sales growth driven by Old Navy and Gap brand

Gap Inc., one of the largest specialty apparel retailer in the United States, reported third-quarter fiscal 2025 results marking the company’s seventh consecutive quarter of positive comparable sales. Net sales for the quarter ended November 1, 2025, rose 3 percent to 3.9 billion dollars, driven by broad-based strength across its Old Navy, Gap, and Banana Republic brands.

Comparable sales increased 5 percent, with store sales up 3 percent and online sales rising 2 percent to represent 40 percent of total revenue. The company ended the quarter with nearly 3,500 stores worldwide, including 2,497 company-operated locations.

“Our strategy is working and our brands are gaining momentum,” said president and chief executive officer Richard Dickson. “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 range and raise our full-year operating margin outlook.”

Except Athleta, all brands record comparable sales growth

Old Navy delivered another strong performance, with net sales up 5 percent to 2.3 billion dollars and comparable sales up 6 percent, driven by momentum in denim, activewear, and kids’ and baby categories alongside culturally relevant partnerships.

Gap brand posted 951 million dollars in net sales, up 6 percent year on year, and achieved its eighth consecutive quarter of positive comparable sales with a 7 percent increase.

Banana Republic saw net sales dip 1 percent to 464 million dollars, but comparable sales grew 4 percent as consumers responded to elevated product and storytelling initiatives.

Athleta remained challenged, with net sales of 257 million dollars down 11 percent and comparable sales also down 11 percent as the brand works through a long-term reset aligned with the company’s reinvigoration playbook.

The company's gross margin declined 30 basis points to 42.4 percent, as merchandise margin contracted 70 basis points due in part to an estimated 190-basis-point net tariff impact. Operating income reached 334 million dollars, resulting in an operating margin of 8.5 percent, while net income totaled 236 million dollars, or 62 cents per diluted share.

Gap Inc. raises FY25 guidance

Dickson emphasized the company’s continued focus on disciplined execution: “We are focused on executing with excellence and finishing the year strong.”

For the fiscal year 2025, the company now expects net sales to grow between 1.7 percent to 2 percent versus prior outlook of growth between 1 to 2 percent. Operating margin is anticipated to be approximately 7.2 percent including an estimated 100-110 bps of net tariff impact.

The company paid a third-quarter dividend of 0.165 cents per share, and its board of directors approved an identical dividend for the fourth quarter.