Gap's Big Swinging CEO Richard Dickson Pulls Magic Act on Q3 Earnings (Shares Pop 16%)

Gap won’t stop until every broke college girl caps their $10 leggings…

So Gap is having one helluva moment. Yes, that Gap—the same company that pretty much sums up my entire 90s childhood (thanks, mom). Against all odds (see: hurricanes, warm weather, and the slow death of malls), Gap managed to post better-than-expected earnings for its fiscal third quarter. Not only did they beat expectations, but they also raised their annual guidance—for the third time this year. Naturally, this had shares jumping 16% in after-hours trading, presumably shocking pretty much everyone. 

(Source: Giphy) 

Which, in reality, is quite the accomplishment considering Gap became the epitome of Mother Nature nightmares last quarter. With the fatal Hurricanes forcing nearly 180 stores to close CEO Richard Dickson (yes, that’s really his name) said the summer heatwave shaved off 1% of sales, while hurricanes took another 2% chunk out of in-store revenue—particularly at Old Navy, which as everyone knows, keeps Gaps lights on.

But thankfully, after our almighty creator had his field day last quarter, sales bounced back. And now as sweater season takes off, Gap is now projecting a 1.5%-2% increase in full-year sales, up from their earlier prediction of “let’s just call it flat.” This also marks the fourth straight quarter of sales growth for Gap, which is basically a retail miracle at this point.

(Source: Yahoo Finance) 

Now again, keep in mind that Gap’s portfolio is carried by Old Navy, the brand that makes up most of its revenue. Old Navy raked in $2.2 billion last quarter, though comparable sales were flat (analysts were hoping for a 0.9% increase). Blame the warm weather—those kids’ jackets and sweaters probably aren’t flying off the shelves when it’s 80 degrees in November.

Meanwhile, the Gap brand itself grew 1% to $899 million, with comparable sales up 3%—a surprise win for Wall Street. Banana Republic, the brand for your LinkedIn headshot wardrobe, saw sales grow 2%, though comparable sales dipped 1%. On the bright side, men’s clothing showed some life, proving that even Bananas overpriced ripoff blazers can stage a comeback. Who knew?

(Source: Reuters) 

And then there’s Athleta, Gap’s answer to the athleisure craze. Under its new CEO Chris Blakeslee (formerly of Alo Yoga), Athleta’s comparable sales climbed 5%, a sharp turnaround from last year’s 19% free fall. Bigly. 

So as anyone can see, Gap’s CEO Richard Dickson, hired in 2023, seems to be working some retail magic. He’s doubled down on nostalgic marketing, celebrity partnerships, and the basics: better products, pricing, and customer experience. It’s not revolutionary, but it’s working—at least for now.

(Source: Giphy) 

That said, Gap still has a long way to go. Critics are quick to point out that the company relies too much on discounts and hasn’t figured out how to sell products at full price without begging customers to “buy one, get one free.” But there’s momentum here, and for a company that’s spent years stuck in retail purgatory, that’s saying something.

Looking towards the explosive holiday season, Gap is betting big on what it calls a “more pronounced holiday expression” in stores. Translation: they’ve put up some extra lights and are praying you’ll buy stuff. Early signs are positive, but there’s a wildcard: tariffs. Only 10% of Gap’s products come from China, but any new trade policies could mean higher costs. Dickson says they’re prepared to pivot their supply chain if necessary, but let’s just hope Trump doesn’t decide to make their comeback any harder than it already is. Spoiler: He will.

(Source: Giphy) 

In the end, Gap isn’t necessarily back to its glory days, but it’s definitely clawing its way out of irrelevance. Stronger brand identities, better inventory management, and a decent start to the holiday season are helping the company make its case as a retail underdog worth watching. Just don’t expect them to stop hawking those trash $2 Old Navy flip-flops anytime soon (seriously, they are trash… I’ve worn them). 

Now obviously, do what you will with this information, but whatever you do—please place your bets accordingly. As always, stay safe and stay frosty, friends! Until next time… 

P.S. I’ll be honest, I’m not one to overhype things, but here’s the deal: The next alert we’ll be dropping this week? It’s a game-changer. And if you miss out, well, it could be costly. Click here ASAP for the details. 

Stocks.News does not hold any positions in companies mentioned in the article.