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Can GAP's Brand Reinvigoration Playbook Drive Sustainable Growth?

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Key Takeaways

  • Gap is executing a transformation focused on operational rigor, product relevance and storytelling.
  • Old Navy's 2% comp growth and strong marketing efficiency anchor GAP's recovery.
  • GAP's "Better in Denim" and brand collaborations have reignited consumer engagement and pricing power.

The Gap, Inc. (GAP - Free Report) is undergoing a defining transformation, proving that heritage brands can successfully reinvent themselves in a rapidly evolving retail landscape. Once seen as a legacy retailer struggling with identity and execution, the company is now charting a disciplined course toward sustainable growth through its “brand reinvigoration playbook.” This framework — focused on operational rigor, product relevance and cultural storytelling — is reshaping Gap’s portfolio from the inside out. Its second-quarter results, which exceeded profit expectations and marked six straight quarters of positive comparable sales, reflect the payoff of a strategy that blends creativity with control, positioning the company for long-term success.

Old Navy continues to be the cornerstone of Gap’s recovery, demonstrating the power of consistent execution and consumer resonance. The brand’s 2% comp growth in the second quarter, on top of last year’s 5%, highlights its ability to deliver steady performance through disciplined merchandising and accessible fashion. With a sharp focus on denim and activewear — reinforced by campaigns like “Old Navy: New Moves” featuring Lindsay Lohan — the brand has maintained its cultural relevance and appeal to families seeking both value and style. Old Navy’s efficiency in marketing spend and product storytelling has allowed it to grow profitably, serving as a model for scalable brand reinvigoration.

The namesake Gap brand has become a compelling case study in revival, reclaiming its position as a pop-culture icon. With a 4% comp increase and strong brand engagement, the company’s success stems from aligning product innovation with cultural connection. The “Better in Denim” campaign, which garnered over 20 million views in just three days, epitomizes the brand’s ability to blend nostalgia with modern appeal. Collaborations with partners like Malbon and BEIS have added aspirational value while lifting average unit retails, signaling a shift from discount-driven sales to value-based growth. Gap’s renewed energy demonstrates how strategic storytelling and trend-right design can reignite consumer loyalty.

Still, the true measure of Gap’s reinvigoration lies in whether it can elevate its entire portfolio. Banana Republic is making encouraging progress in the premium lifestyle segment with a 4% comp gain, while Athleta faces a more complex turnaround following a leadership transition and product reset. As tariff headwinds and cost pressures continue to weigh on margins, the company’s ability to balance reinvestment in brand building with operational efficiency will be critical. If Gap can sustain its current momentum and replicate its playbook’s success across all four brands, it may well solidify its transformation from a recovering retailer into a consistently high-performing, culturally resonant portfolio of modern American brands.

GAP’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #4 (Sell) company have gained 2.1% in the past three months compared with the industry and the broader Retail-Wholesale sector’s rise of 0.2% and 1.7%, respectively.

GAP Stock's Past Three-Month Performance

Zacks Investment Research
Image Source: Zacks Investment Research

Is GAP a Value Play Stock?

GAP currently trades at a forward 12-month P/E ratio of 9.63X, which is lower than the industry average of 17.48X and notably below the sector average of 24.20X.

GAP P/E Ratio (Forward 12 Months)

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Some top-ranked stocks are Genesco Inc. (GCO - Free Report) , Sally Beauty Holdings, Inc. (SBH - Free Report) and The TJX Companies, Inc. (TJX - Free Report) .

Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales implies growth of 71.3% and 3.7%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.

Sally Beauty operates as a specialty retailer and distributor of professional beauty supplies. It currently has a Zacks Rank of 2 (Buy). SBH delivered a trailing four-quarter average earnings surprise of 8.3%.

The Zacks Consensus Estimate for Sally Beauty’s current fiscal-year earnings indicates growth of 8.9% from the year-ago actuals.

The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 8.9% and 7%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.

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