Gap Inc (NYSE:GPS) shares look set to open nearly 9% higher on Friday after investors had a night to digest a surprisingly punchy third-quarter update.
The headline number, a 5% jump in comparable sales, marks the chain’s strongest underlying growth in years and lands well ahead of forecasts, helped by a runaway denim campaign fronted by pop group Katseye.
The beat was not just cosmetic. Revenue edged past expectations, earnings per share came in ahead, and management bumped full-year sales and margin guidance to the top end of previous ranges.
Crucially, CEO Richard Dickson says the group is selling more at full price, cutting back on discounts and drawing shoppers “from all income cohorts”, a confidence boost in a market where most apparel retailers are pleading caution.
Old Navy and the core Gap brand did the heavy lifting, delivering standout comparable sales gains. Banana Republic held steady with a second quarter of growth. Athleta remains the weak spot, with double-digit declines as its reset drags on.
Tariffs dented net income and clipped margins, a reminder that external pressures have not gone away, but the overarching story is that Gap’s long-promised operational clean-up is finally showing in the numbers. In a drab apparel landscape, that is enough to move the stock.