Gap Inc. (NYSE: GAP), parent of Old Navy, Gap, Banana Republic and Athleta, is back in the spotlight today as Wall Street digests stronger‑than‑expected third‑quarter results, a raised full‑year outlook and a wave of bullish analyst calls.
After reporting Q3 numbers late Thursday, the apparel retailer’s shares jumped in after‑hours trading and are trading higher again this morning, helped by improved sales across its three biggest brands and growing confidence in its turnaround strategy. [1]
Below is a full rundown of everything investors need to know about Gap Inc. on November 21, 2025.
Q3 2025: Sales Beat, Margins Hold, Guidance Raised
Gap’s third quarter of fiscal 2025 (ended November 1) came in ahead of expectations on both the top and bottom line:
- Net sales: $3.9 billion, up 3% year over year, modestly above analyst estimates around $3.91 billion. [2]
- Comparable (same‑store and digital) sales: up 5%, marking the seventh consecutive quarter of positive comps. [3]
- Gross margin: 42.4%, slightly lower than a year ago but above the company’s own outlook, despite a meaningful hit from tariffs. [4]
- Operating income: $334 million, for an 8.5% operating margin. [5]
- Net income: $236 million, or $0.62 in diluted EPS, down from $0.72 a year earlier but ahead of consensus estimates around $0.58–$0.59. [6]
Stores still matter: in‑store sales grew 3%, supported by roughly 3,500 locations worldwide, while online sales rose 2% and now account for about 40% of total revenue. [7]
Management also highlighted a strong balance sheet, with about $2.5 billion in cash and short‑term investments, up double digits versus last year, and positive year‑to‑date free cash flow. [8]
Brand Scorecard: Old Navy, Gap and Banana Republic Gain Momentum
One of the biggest stories in today’s coverage is how broad‑based the sales improvement was across Gap’s portfolio:
- Old Navy
- Net sales: $2.3 billion, up 5% year over year.
- Comparable sales: +6%.
- Strength in denim, activewear, kids and baby, aided by high‑profile collaborations. [9]
- Gap (namesake brand)
- Net sales: $951 million, up 6%.
- Comparable sales: +7%, marking eight consecutive quarters of positive comps for the brand. [10]
- Banana Republic
- Net sales: $464 million, down 1%, but
- Comparable sales: +4%, helped by “elevated” fashion and dressier assortments. [11]
- Athleta
- Net sales: $257 million, down 11%.
- Comparable sales: –11%, the brand’s fourth straight quarterly decline, as Gap works through a strategic reset in women’s activewear. [12]
Industry reports and the company’s own release frame Athleta as the main drag on results while emphasizing that the “reinvigoration playbook” now driving the Gap and Old Navy brands will take time to turn Athleta around. [13]
Viral Denim and Big Collaborations: How Marketing Is Driving the Turnaround
Several of today’s stories point to marketing – not discounting – as the engine of Gap’s comeback.
- Reuters notes that Gap’s sales beat was fueled by limited‑edition collections tied to Disney, Netflix’s Stranger Things and Universal’s Wicked, as well as campaigns like “Better in Denim,” “Feels Like Gap” and “Get Loose” with singer Troye Sivan. [14]
- A Business Insider piece goes deeper on the “Better in Denim” campaign featuring girl group Katseye dancing to Kelis’ “Milkshake,” which CEO Richard Dickson says generated over 8 billion impressions and around 500 million views, converting into double‑digit denim sales growth and particularly strong traction with Gen Z shoppers. [15]
Bloomberg similarly characterizes Gap’s strategy as a mix of celebrity‑driven marketing, flashy collaborations and cleaner, more on‑trend assortments, helping the retailer stand out even as many peers warn about cautious consumers. [16]
In short, Gap is aiming to win on brand heat and product, not just promotions – a notable shift from several years ago when its banners leaned heavily on constant discounts.
Who’s Shopping Where: Higher‑Income at Gap, Value‑Hunters at Old Navy
A widely cited MarketWatch story today highlights a clear income split inside the Gap portfolio:
- Higher‑income, younger customers are gravitating to the Gap brand, where refreshed fashion basics and the viral denim push have repositioned the chain as more aspirational.
- Lower‑income consumers, feeling the pinch from inflation and higher living costs, are gravitating to Old Navy, which still skews more value‑oriented – but management says the banner is seeing healthy demand across income tiers, not just among budget shoppers. [17]
On the product side:
- Old Navy is seeing strong demand for wide‑leg and baggier denim fits for women and girls, alongside growth in kids, baby and active categories.
- The chain is also leaning into beauty, now rolled out to about 150 stores with dedicated beauty sections and staff, which executives describe as a “clear and meaningful opportunity.” [18]
Banana Republic continues to focus on elevated, dressier fashion that resonates with higher‑income shoppers, even as the brand trims underperforming categories. [19]
Outlook: Guidance Moves Higher Despite Tariffs and Athleta Weakness
The other big headline this morning is Gap’s raised full‑year fiscal 2025 outlook.
From the company’s release and subsequent analysis:
- Net sales growth is now expected at 1.7% to 2.0%, up from a prior 1.0% to 2.0% range and at the high end of earlier guidance. [20]
- Operating margin is projected around 7.2%, up from previous guidance of 6.7%–7.0%, despite an estimated 100–110 basis‑point impact from tariffs. [21]
- Capital expenditures are still expected at $500–$550 million, and Gap plans about 35 net store closures this year, continuing to rationalize its footprint. [22]
Reuters adds that Gap is also reducing its dependency on Chinese manufacturing, with the company expecting its sourcing from China to fall below 3% of total merchandise by the end of 2025, down from under 10% in 2024. [23]
Management argues that the stronger‑than‑expected Q3 and “quarter‑to‑date” momentum into the holiday season give them the confidence to lift both sales and margin guidance, even with ongoing tariff headwinds and consumers still cautious. [24]
Wall Street Reaction: GAP Stock Rises and Price Targets Climb
Investors are responding positively to the news:
- Gap’s stock rose roughly 5% in after‑hours trading on Thursday after the earnings release and upbeat outlook. [25]
- In pre‑market trade today, shares were up around 4.9%, with several outlets listing Gap among the top gainers after its results beat. [26]
Analysts are quickly updating their models:
- Telsey Advisory Group this morning raised its price target from $24 to $26 while keeping a “Market Perform” rating, citing stronger brand momentum and a constructive risk‑reward. [27]
- Evercore ISI lifted its target from $25 to $28, reflecting confidence in Gap’s improving execution and multi‑brand strategy. [28]
- Earlier in November, Jefferies and Barclays each moved to more bullish stances with price targets up to $30, while UBS and Morgan Stanley also nudged targets higher, contributing to an improving consensus view on the stock. [29]
According to recent aggregation of brokerage data, the average 12‑month target price sits in the mid‑$20s, implying modest upside from current levels, with a skew toward “Outperform”‑style ratings. [30]
Risks: Athleta, Margins and the Consumer
Despite today’s upbeat tone, coverage also flags several ongoing risks:
- Athleta remains a problem child, with double‑digit comp declines and no clear timeline yet for a full recovery. Analysts describe it as the “biggest drag” on the company. [31]
- Tariffs are still expected to shave 100–110 basis points off annual operating margin, and any escalation could pressure profitability further. [32]
- The Q3 beat relied in part on higher average selling prices, which may be harder to sustain if the consumer weakens or promotional intensity rises across apparel retail. [33]
- Macro headwinds – from inflation to uneven wage growth – leave lower‑income shoppers especially sensitive, making Old Navy’s performance a key swing factor heading into the holidays. [34]
What Today’s News Means for Investors
Putting everything together, the November 21 newsflow around Gap Inc. paints a picture of a turnaround that’s gaining traction but still has moving pieces:
- Core brands are clearly healthier. Old Navy, Gap and Banana Republic all posted positive comps, suggesting the product and brand work is resonating.
- Marketing is working — and not just online. Viral campaigns and celebrity collaborations are showing up in actual store and digital sales, particularly in denim.
- Guidance going up in a tough environment is notable. Raising both revenue and margin expectations, while peers are cautious, signals real confidence from management.
- But Athleta and tariffs remain watch‑items. A successful fix at Athleta and any easing of trade headwinds could be incremental upside; a prolonged slump or higher costs could pressure the story.
For investors following GAP/GPS stock, the near‑term focus will be on:
- How the company performs through the crucial holiday quarter,
- Early signs of an Athleta turnaround, and
- Whether Gap can maintain its brand momentum without resorting to deep discounting.
Nothing here is personal financial advice, but as of today, November 21, 2025, Gap Inc. has firmly moved the conversation from “can it stabilize?” to “how much of this momentum is sustainable?” — a shift that’s being reflected in both its share price and Wall Street’s tone.
References
1. www.reuters.com, 2. www.prnewswire.com, 3. investors.gapinc.com, 4. www.prnewswire.com, 5. www.fibre2fashion.com, 6. www.fibre2fashion.com, 7. www.prnewswire.com, 8. www.fibre2fashion.com, 9. investors.gapinc.com, 10. investors.gapinc.com, 11. investors.gapinc.com, 12. investors.gapinc.com, 13. investors.gapinc.com, 14. www.reuters.com, 15. www.businessinsider.com, 16. www.bloomberg.com, 17. www.marketwatch.com, 18. www.marketwatch.com, 19. wwd.com, 20. investors.gapinc.com, 21. investors.gapinc.com, 22. investors.gapinc.com, 23. www.reuters.com, 24. investors.gapinc.com, 25. www.marketwatch.com, 26. www.investing.com, 27. www.gurufocus.com, 28. www.investing.com, 29. www.gurufocus.com, 30. www.gurufocus.com, 31. www.reuters.com, 32. investors.gapinc.com, 33. www.fibre2fashion.com, 34. www.marketwatch.com
