Gap Inc. soared after strong quarterly sales showed that chief executive officer Richard Dickson’s turnaround playbook is working.
The retailer exceeded analyst estimates for comparable sales, led by better-than-expected results at the namesake brand, Old Navy and Banana Republic. Athleta, the struggling athleisure brand, posted an unexpected decline.
Gap shares surged 17 percent in trading before US markets opened on Friday. The stock had fallen 18 percent this year through Thursday’s close.
The performance of Gap’s namesake brand was “particularly impressive,” Paul Lejuez, an analyst for Citi wrote in a research note. The unit’s comparable sales rose 7 percent, topping Wall Street’s prediction for an average gain of 1.7 percent. This performance suggests it’s resonating with consumers, he said.
Under Dickson, the company has leaned into celebrity partnerships and is refreshing its leadership roster, including appointing fashion designer Zac Posen as creative director.
Gap sees revenue flat to up slightly in the current quarter. Analysts surveyed by Bloomberg were looking for 1 percent growth, on average. For the full year, Gap forecasts revenue will be up as much as 2 percent.
The retailer included 20 percent tariffs on China and 25 percent tariffs on Canada and Mexico in its forecast. Less than 10 percent of Gap products are sourced from China and less than 1 percent are from Canada and Mexico combined, Dickson said in an interview with Bloomberg News.
“It’s important to note we’ve been operating in a highly dynamic backdrop for the last few years, and we’re expecting the same for 2025,” Dickson said.
By Lily Meier
Learn more:
The BoF Podcast | How Zac Posen is Reenergising Gap Inc.
BoF founder and editor in chief Imran Amed sits down with the newly-appointed creative director of Gap Inc. to explore how the latest chapter in his creative journey is changing the way he thinks about success and professional fulfilment.
