In Q3, FY25, ending Nov 2, 2024, Gap Inc increased its net income to $274 million from $218 million in the same period last year. The company’s operating income rose to $355 million, compared to $250 million a year ago. Its net sales expanded by 2 per cent to $3.8 billion while comparable sales grew by 1 per cent Y-o-Y.
Expressing pride over the results, Richard Dickson, CEO, notes, the company’s net sales have grown for four consecutive quarters. The company is optimistic about the future and has raised its 2024 guidance for sales, gross margin, and operating income, citing strong business fundamentals. It estimates, its net sales will increase by 1.5 to 2 per cent this year, compared to previous guidance of less than 1 per cent. The company’s 2023 sales stood at $14.9 billion.
The company’s gross margin is expected to increase by about 220 basis points as against the prior forecast of 200 basis points. Operating income is projected to rise by around 60 per cent, up from the previous estimate of 50 per cent.
Benefitting from the holiday season, Gap Inc is already seeing positive results from campaigns like Gap's ‘Give Your Gift.’ Key categories such as activewear and denim have performed well, particularly at Old Navy, Gap, and Athleta. Wider leg and looser fit denim styles are proving popular, while activewear continues to be a significant growth area.
By division, the Q3, FY25 net sales of Old Navy rose by 1 per cent to $2.2 billion, while Gap brand’s net sales also increased by 1 per cent to $899 million. Comparable sales for Gap increased by 3 per cent, marking the fourth consecutive quarter of growth. Banana Republic saw a 2 per cent rise in net sales to $469 million, with strong performance in men's wear. However, comparable sales declined by 1 per cent, indicating ongoing adjustments in women's categories. Athleta’s Q3, FY25 net sales grew by 4 per cent to $290 million, with comparable sales rising by 5 per cent, driven by new products and effective marketing.
Emphasising the importance of ‘brand invigoration,’ particularly at Old Navy and Gap, which has led to market share gains, Dickson says, the company’s online sales rose by 7 per cent to 40 per cent of the company’s total sales.
Gap Inc. also introduced a new Gap store in Manhattan’s Flatiron district, showcasing the brand's refreshed aesthetics with dedicated spaces for key categories like fleece, denim, and khakis, as well as modern interpretations of its heritage. Dickson expressed confidence in the company’s assortments and momentum as it heads into the crucial holiday season.
