Gap Inc. reported solid results for the third quarter of fiscal 2025, achieving its seventh consecutive quarter of positive comparable sales. Net sales for the quarter ended November 1, 2025 increased 3 percent to $3.9 billion, supported by strong performance from Old Navy, Gap and Banana Republic brands.
The company’s comparable sales increased five percent, with store sales increasing three percent and online sales increasing two percent. The latter accounted for 40 percent of total sales. Gap Inc. closed the quarter with nearly 3,500 stores worldwide, including 2,497 company-owned locations.
Positive development at Old Navy, Gap and Banana Republic
The Old Navy brand continued its success. Net sales rose five percent to $2.3 billion, while comparable sales increased six percent. The denim, activewear and children’s and baby fashion categories grew particularly strongly, supported by culturally relevant partnerships. The Gap brand also achieved a positive result. Net sales were $951 million, up six percent year-over-year.
In contrast, Banana Republic saw a slight 1 percent decline in net sales to $464 million. However, comparable sales increased four percent, reflecting positive customer responses to improved products and storytelling initiatives.
The activewear brand Athleta, which belongs to the group, continued to struggle with challenges. Net sales fell 11 percent to $257 million, as did comparable sales. The brand is currently undergoing a long-term realignment that is consistent with Gap Inc.’s overall revitalization plan.
Gap Inc. raises full-year guidance
Gap Inc.’s gross margin fell 30 basis points to 42.4 percent, while its trading margin fell 70 basis points, due in part to an estimated net tariff effect of 190 basis points. Operating income was $334 million, resulting in an operating margin of 8.5 percent. Net income rose to $236 million, equal to 62 cents per diluted share.
As part of the release, Gap raised its fiscal 2025 guidance and now expects net sales growth of 1.7 percent to 2 percent, compared to a previously forecast range of 1 percent to 2 percent. The operating margin is expected to be around 7.2 percent, with the net tariff effect estimated at 100 to 110 basis points.
Richard Dickson, President and CEO of Gap Inc., stated, “Our strategy is working and our brands are gaining momentum. The positive performance in the third quarter and strong year-to-date performance position us well for the holiday season and give us the confidence to raise our net sales guidance to the upper end of the range. We are also increasing our full-year operating margin estimate.”
For the third quarter, the company paid a dividend of $0.165 per share. The board of directors already approved an identical dividend for the fourth quarter.
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