GAP Inc. surged after reporting stronger-than-expected quarterly sales, indicating that CEO Richard Dickson’s turnaround strategy is taking hold. The retailer outperformed analyst forecasts for comparable sales, with GAP, Old Navy, and Banana Republic delivering solid results. However, its struggling athleisure brand, Athleta, saw an unexpected decline.
GAP shares jumped 17% in pre-market trading on Friday, recovering from an 18% slump earlier this year. Citi analyst Paul Lejuez described the performance of GAP’s namesake brand as “particularly impressive,” with comparable sales climbing 7%—far exceeding Wall Street’s 1.7% forecast. This suggests the brand is resonating with consumers.
Under Dickson’s leadership, GAP has embraced celebrity partnerships and overhauled its executive team, appointing fashion designer Zac Posen as creative director.
For the current quarter, the company expects revenue to remain flat or increase slightly, aligning with analysts’ average forecast of 1% growth. Full-year revenue is projected to rise by up to 2%.
GAP’s outlook factors in tariffs of 20% on China and 25% on Canada and Mexico. However, Dickson noted that less than 10% of its products are sourced from China, while Canada and Mexico contribute under 1%.
“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 in a statement.
GAP Inc. has made significant strides in sustainability. Since 2017, it has reduced Scope 1 and 2 greenhouse gas emissions by 77%, targeting a 90% reduction by 2030. In 2022, renewable energy accounted for 58% of the electricity used in company-operated facilities, with a goal of reaching 100% by 2030. The company has also replenished 4.8 billion litres of water, achieving 15% of its goal to balance consumption by 2030.
Sustainable sourcing remains a priority. As of 2023, 98% of its cotton is responsibly sourced, and it plans to use 45% recycled polyester by 2025.
On the social front, Old Navy’s ‘This Way Onward’ programme has supported over 19,600 young people, and the company is committed to filling 5% of entry-level store roles annually by 2025. Meanwhile, the Women + Water Alliance has improved access to clean water and sanitation for over 2.5 million people since 2017, aiming to reach 5 million by 2030.
