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Gap (GPS) earnings Q3 2023


A Gap retail store sign on September 20, 2022 in Los Angeles, California. 

Allison Dinner | Getty Images

Gap posted a better-than-expected fiscal third quarter on Thursday, but the apparel retailer still appears cautious ahead of the holiday season as it works to reverse slowdowns at Banana Republic and Athleta. 

The company, which also runs Old Navy and its namesake banner, far exceeded Wall Street’s estimates for profit and same-store sales, but only reaffirmed its full-year guidance and expects holiday-quarter sales to be flat to slightly negative. 

Shares of Gap soared more than more than 30% on Friday, giving it a market cap of $6.6 billion. Year to date, they’re up nearly 60%.

Here’s how Gap performed during the quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: 59 cents, adjusted vs. 19 cents expected
  • Revenue: $3.77 billion vs. $3.60 billion expected

The company’s reported net income for the three-month period that ended Oct. 28 was $218 million, or 58 cents per share, compared with $282 million, or 77 cents per share, a year earlier. Excluding costs associated with its restructuring, Gap reported earnings of 59 cents per share. 

Sales dropped to $3.77 billion, down about 7% from $4.04 billion a year earlier. 

Gap hasn’t managed to reverse its ongoing revenue slump, but its same-store sales were far better than expected. They dropped only 2%, compared with the 8.7% slowdown that analysts had expected, according to StreetAccount. 

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For the third quarter in a row, Gap also saw improvements in its gross margin thanks to lower commodity costs, fewer promotions and a series of cost-cutting initiatives that have been underway for several quarters. Those moves include sweeping layoffs that cut more than 2,000 jobs.

During the quarter, Gap’s gross margin improved by 3.9 percentage points to 41.3%, which came in ahead of the 38.9% that analysts had anticipated, according to StreetAccount. The company said it expects gross margins to continue to improve.

The longtime apparel giant has been on a quest to improve sales and regain the relevancy that once defined the company. It recently tapped former Mattel executive Richard Dickson to be its chief executive. Dickson, who was credited with reviving the Barbie franchise during his time at the toy company, plans to use his branding prowess to turn Gap around and position the company back into the mainstream of popular culture. 

“Gap Inc. has weathered a lot of disruption over the last several years, both external macro factors, as well as execution missteps and strategically well intended initiatives have impacted the company. All that said, the opportunity is clear,” Dickson said on an earnings call with analysts, his first as Gap’s CEO. “I have conviction that we can reinvigorate our portfolio brands, while we lead a creative culture that attracts, retains and develops the best talent in…



Read More: Gap (GPS) earnings Q3 2023

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