Gap Inc (NYSE:GPS) has earned a repeat ‘Buy’ rating from Jefferies analysts following a visit to Old Navy’s Times Square flagship store, who highlighted momentum in the brand’s beauty strategy.
The firm, which maintains a $30 price target, representing 18% upside from Monday’s close, wrote that the visit “underscores a strategic growth opportunity” for Gap, whose brands include Old Navy, Banana Republic and Athleta.
The analysts reported strong sell-through in the beauty section, particularly for Old Navy’s proprietary body lotions in the Sweet, Splash, and Vibe scents. Associates told Jefferies that Sweet was nearly out of stock at checkout, highlighting robust demand.
Travel-size products are also performing well, a trend Jefferies wrote reflects the heavy tourist traffic at the location.
The section itself was described as “well-organized and visually engaging, with bright signage and a curated mix of national brands, notably e.l.f. and Aquaphor, and ON’s own private label products.”
Hair mists in travel sizes are another driver of volume, though full-size sell-through appeared more modest, the firm noted.
Jefferies also noted that Old Navy’s Vibe scent, described by associates as more musky, “appears to be resonating with male customers,” signaling potential to broaden the category’s reach as the brand expands its proprietary assortment.
Jefferies said Old Navy’s beauty initiative remains “underappreciated by the Street,” calling it a meaningful long-term growth lever for Gap.
The firm pointed to the company’s test-and-learn approach, using shop-in-shop pilots and a blend of owned and third-party offerings, as a setup for scaling in the coming years.
“Beauty remains a high-margin, incremental sales driver, and the in-store execution at Times Square demonstrates ON’s ability to create a compelling, differentiated experience that aligns with its value-oriented brand positioning,” the analysts wrote.
The firm also highlighted Gap’s partnership strategy as a traffic driver. On Monday, Gap announced a collaboration with beauty brand Summer Fridays to launch a 20-piece capsule collection that includes knits, fleece sets, and a beauty bundle gift-with-purchase.
“The disciplined expansion into beauty, alongside ongoing strength in core apparel, positions the company well for sustained top- and bottom-line growth,” the analysts concluded. “If successful, the beauty rollout could serve as a high-margin growth engine and a catalyst for further market share gains.”