Gap CEO says the company is ‘winning’ across all income cohorts despite macro pressure

Gap (GAP) Inc. is holding its ground with all shoppers, even as consumer spending shows signs of strain.

“We’re winning with all income cohorts,” Gap CEO Richard Dickson told Yahoo Finance’s Market Catalysts. “We see equal growth across low, middle, and high [income shoppers].”

The company’s two biggest brands, Old Navy and Gap, are showing consistent strength, posting consecutive quarters of positive comparable sales — a sign its turnaround strategy may be sticking.

Gap stock rose over 9% in Friday trading following Dickson’s comments. It’s up 6% year to date, underperforming the S&P 500’s (^GSPC) 13% gain.

Dickson described the company’s latest quarterly performance as a “playbook” that’s working. Revenue hit $3.94 billion, up 3% year over year, beating analysts’ estimates of $3.91 billion, per Bloomberg. Adjusted earnings per share reached $0.62, down nearly 14% from a year ago but surpassing the expected $0.59 from Wall Street.

Net sales rose 3% from last year, while same-store sales increased 5% — marking the seventh consecutive quarter of positive comps. Online sales rose 2% and now account for roughly 40% of net sales.

Old Navy, the retailer’s largest brand, delivered a 6% comparable sales gain, while Gap itself posted a 7% increase. Banana Republic saw 4% growth. Athleta, the athletic apparel brand, meanwhile, saw an 11% decline. Gap’s gross margins exceeded analysts’ expectations, despite continued tariff pressure.

Read more: What Trump’s tariffs mean for the economy and your wallet

Corey Tarlowe at Jefferies said the quarter “signals strength” and represents a moment “to lean in,” citing disciplined cost control and strategic investments.

“Under the leadership of CEO Richard Dickson, the company is executing a clear strategy to reinvigorate its brands and drive profitable growth,” Tarlowe wrote, highlighting the potential upside from beauty category expansion and ongoing operational improvements.

Citi analyst Paul Lejuez noted that Old Navy and Gap are in “very healthy positions,” pointing to fashion tailwinds, a strong assortment, and more effective marketing as drivers of comparable sales growth and reduced reliance on promotions.

He described the fourth quarter guidance as conservative but expects momentum to continue into the critical holiday season.

Dickson credited Gap’s product innovation, storytelling, and execution for the company’s broad appeal and largely “fixing the fundamentals” of the storied retailer. Denim campaigns, fleece collections, and a “sleep to street” approach in sleepwear have helped lift regular-price sales while reducing discounting.

The retailer’s partnerships, including a “Better in Denim” campaign with girl group Katseye and a DoorDash (DASH) tie-in, reflect the company’s efforts to “be everywhere our consumer is,” according to Dickson. The 56-year-old company has also tapped Netflix (NFLX) for a “Stranger Things” collaboration, and Universal on “Wicked,” furthering its push into pop culture marketing.

Physical stores remain a focus. Dickson said the company now has about 2,500 locations and is at a “pivotal point,” exploring new concepts, refreshed store models, and target closures to enhance relevance for shoppers. He noted that Gap likely has another 35 stores it plans to close this year.

The CEO also outlined a three-phase transformation roadmap. With the first phase of “fixing the fundamentals” largely complete, the company is now in a “building momentum” stage, which involves refining its playbook and investing in high-potential categories like beauty and accessories.

Still, challenges remain. Macro pressures on lower-income consumers could test Gap’s broad appeal, particularly if the economic environment tightens further.

Francisco Velasquez is a Reporter at Yahoo Finance. Follow him on LinkedIn, X, and Instagram. Story tips? Email him at francisco.velasquez@yahooinc.com.

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