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Gap Set to Report Q3 Earnings: Here's What Investors Should Know
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Key Takeaways
Gap's Q3 EPS is expected to rise 17.7% YoY to 73 cents, with revenues growing 1.9% to $4.02B.
Strong denim demand, fresh assortments and marketing are expected to boost Gap and Old Navy sales.
Cost controls may aid margins, while Athleta's weakness and rising expenses pose risks.
The Gap, Inc. (GAP - Free Report) is expected to post year-over-year growth in both revenues and earnings when it reports third-quarter fiscal 2026 results on Nov. 19, after the closing bell. For revenues, the Zacks Consensus Estimate is pegged at $4.02 billion, indicating 1.9% growth from the year-ago quarter’s figure.
The consensus estimate for the bottom line is pegged at 73 cents per share, indicating a 17.7% rise from the year-ago quarter’s figure. The consensus estimate for fiscal third-quarter earnings has been stable in the past 30 days.
The San Francisco, CA-based company has a trailing four-quarter earnings surprise of 2.1%, on average. In the last reported quarter, the company’s earnings delivered a positive earnings surprise of 4%.
Factors Likely to Impact Gap’s Q3 Results
Gap’s third-quarter fiscal 2026 performance is likely to have benefited from continued momentum at its namesake Gap brand, supported by strong product offerings, effective marketing and growing customer engagement. The brand’s focus on denim and fleece, backed by fresh designs and culturally relevant collaborations, is expected to have sustained demand. Its ability to attract younger shoppers while retaining existing customers may have further strengthened sales. Celebrity-led campaigns, compelling product storytelling and improving store experiences likely supported traffic and conversions. Additionally, strength across women’s, men’s, kids’ and baby categories is expected to have reinforced the brand’s market position and contributed to revenue growth.
Old Navy’s improving business trends are also likely to have supported Gap’s fiscal third-quarter performance. The brand entered the fall season with a stronger assortment after addressing earlier weaknesses in summer merchandise, pricing and marketing. Growing demand for denim, activewear, sweaters and knits is expected to have helped revive sales momentum. The launch of Old Navy Sport, expansion of Old Navy Beauty Co. and partnership with Fanatics likely created additional opportunities to attract shoppers. Meanwhile, marketing campaigns featuring Cardi B and MrBeast may have improved customer traffic, particularly during the back-to-school season. A sharper focus on fashion and competitive pricing likely strengthened Old Navy’s value proposition.
Gap’s disciplined approach to pricing, inventory management and cost control is expected to have supported third-quarter profitability. Better product sell-throughs and reduced discounting at the Gap brand likely strengthened merchandise margins, while tighter inventory management helped limit markdowns. The company’s tariff mitigation initiatives and favorable tariff developments are also expected to have provided some relief from sourcing-related cost pressures. Additionally, operational efficiencies and expense discipline, alongside a favorable comparison with elevated incentive compensation expenses in the year-ago period, may have supported earnings. Banana Republic’s improving brand positioning, elevated merchandise offerings and strength across men’s and women’s categories likely provided additional support to overall performance.
Despite these positives, Gap’s fiscal third-quarter performance is likely to have faced pressure from continued weakness at Athleta and lingering challenges at Old Navy. Athleta’s turnaround remained in its early stages, with merchandise improvements and efforts to rebuild customer engagement yet to drive a meaningful sales recovery. Its cautious inventory approach may have further constrained near-term revenue growth. Meanwhile, Old Navy’s pricing adjustments and promotional investments to strengthen its value proposition could have weighed on merchandise margins. Higher fuel costs, along with increased occupancy and depreciation expenses related to store investments, remodels and technology upgrades, may have added to profitability pressures. These challenges could have partially offset the benefits of improving brand momentum and operational discipline.
What the Zacks Model Unveils for GAP
Our proven model does conclusively predict an earnings beat for Gap this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is exactly the case here.
Gap currently has an Earnings ESP of +3.14% and a Zacks Rank of 3. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Valuation Picture of GAP Stock
Going by the price/earnings ratio, the stock is currently trading at 8.25 on a forward 12-month basis, lower than 14.09 for the Retail - Apparel and Shoes industry. Also, it is trading lower than its median of 9.78.
Image Source: Zacks Investment Research
The recent market movements show that Gap’s shares have gained 3.1% in the past three months compared with the industry's 7.1% growth.
Image Source: Zacks Investment Research
Other Stocks With the Favorable Combination
Here are a few companies that, according to our model, also have the right combination of elements to come up with an earnings beat this reporting cycle:
Dollar General Corporation (DG - Free Report) has an Earnings ESP of +8.66% and a Zacks Rank of 2 at present. DG is likely to register increases in its top and bottom lines when it reports third-quarter fiscal 2026 numbers. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for quarterly EPS of $1.40 suggests an increase of 9.4% from the year-ago quarter’s reported number. The consensus estimate for quarterly revenues is pegged at $11.1 billion, suggesting growth of 4.5% from the prior-year quarter’s reported figure. DG has a trailing four-quarter earnings surprise of 19.1%, on average.
Ulta Beauty Inc. (ULTA - Free Report) currently has an Earnings ESP of +1.84% and a Zacks Rank of 2. ULTA is expected to register increases in its top and bottom lines when it reports third-quarter fiscal 2026 results.
The consensus mark for revenues is pegged at $2.99 billion, indicating a rise of 4.5% from the figure reported in the year-ago quarter. The Zacks Consensus Estimate for quarterly EPS of $5.60 suggests a drop of 9% from the year-ago quarter. ULTA has a trailing four-quarter earnings surprise of 7.6%, on average.
Bath & Body Works, Inc. (BBWI - Free Report) currently has an Earnings ESP of +13.43% and a Zacks Rank of 2. BBWI is likely to register declines in its top and bottom lines when it reports third-quarter fiscal 2026 numbers. The consensus estimate for quarterly revenues is pegged at $1.5 billion, suggesting a decline of 3.2% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for quarterly EPS of 11 cents suggests a decrease of 68.6% from the year-ago quarter’s reported number. BBWI has a trailing four-quarter earnings surprise of 43%, on average.
View the Zacks #1 Rank List
Image: Bigstock
Gap Set to Report Q3 Earnings: Here's What Investors Should Know
Key Takeaways
The Gap, Inc. (GAP - Free Report) is expected to post year-over-year growth in both revenues and earnings when it reports third-quarter fiscal 2026 results on Nov. 19, after the closing bell. For revenues, the Zacks Consensus Estimate is pegged at $4.02 billion, indicating 1.9% growth from the year-ago quarter’s figure.
The consensus estimate for the bottom line is pegged at 73 cents per share, indicating a 17.7% rise from the year-ago quarter’s figure. The consensus estimate for fiscal third-quarter earnings has been stable in the past 30 days.
The Gap, Inc. Price, Consensus and EPS Surprise
The Gap, Inc. price-consensus-eps-surprise-chart | The Gap, Inc. Quote
The San Francisco, CA-based company has a trailing four-quarter earnings surprise of 2.1%, on average. In the last reported quarter, the company’s earnings delivered a positive earnings surprise of 4%.
Factors Likely to Impact Gap’s Q3 Results
Gap’s third-quarter fiscal 2026 performance is likely to have benefited from continued momentum at its namesake Gap brand, supported by strong product offerings, effective marketing and growing customer engagement. The brand’s focus on denim and fleece, backed by fresh designs and culturally relevant collaborations, is expected to have sustained demand. Its ability to attract younger shoppers while retaining existing customers may have further strengthened sales. Celebrity-led campaigns, compelling product storytelling and improving store experiences likely supported traffic and conversions. Additionally, strength across women’s, men’s, kids’ and baby categories is expected to have reinforced the brand’s market position and contributed to revenue growth.
Old Navy’s improving business trends are also likely to have supported Gap’s fiscal third-quarter performance. The brand entered the fall season with a stronger assortment after addressing earlier weaknesses in summer merchandise, pricing and marketing. Growing demand for denim, activewear, sweaters and knits is expected to have helped revive sales momentum. The launch of Old Navy Sport, expansion of Old Navy Beauty Co. and partnership with Fanatics likely created additional opportunities to attract shoppers. Meanwhile, marketing campaigns featuring Cardi B and MrBeast may have improved customer traffic, particularly during the back-to-school season. A sharper focus on fashion and competitive pricing likely strengthened Old Navy’s value proposition.
Gap’s disciplined approach to pricing, inventory management and cost control is expected to have supported third-quarter profitability. Better product sell-throughs and reduced discounting at the Gap brand likely strengthened merchandise margins, while tighter inventory management helped limit markdowns. The company’s tariff mitigation initiatives and favorable tariff developments are also expected to have provided some relief from sourcing-related cost pressures. Additionally, operational efficiencies and expense discipline, alongside a favorable comparison with elevated incentive compensation expenses in the year-ago period, may have supported earnings. Banana Republic’s improving brand positioning, elevated merchandise offerings and strength across men’s and women’s categories likely provided additional support to overall performance.
Despite these positives, Gap’s fiscal third-quarter performance is likely to have faced pressure from continued weakness at Athleta and lingering challenges at Old Navy. Athleta’s turnaround remained in its early stages, with merchandise improvements and efforts to rebuild customer engagement yet to drive a meaningful sales recovery. Its cautious inventory approach may have further constrained near-term revenue growth. Meanwhile, Old Navy’s pricing adjustments and promotional investments to strengthen its value proposition could have weighed on merchandise margins. Higher fuel costs, along with increased occupancy and depreciation expenses related to store investments, remodels and technology upgrades, may have added to profitability pressures. These challenges could have partially offset the benefits of improving brand momentum and operational discipline.
What the Zacks Model Unveils for GAP
Our proven model does conclusively predict an earnings beat for Gap this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is exactly the case here.
Gap currently has an Earnings ESP of +3.14% and a Zacks Rank of 3. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Valuation Picture of GAP Stock
Going by the price/earnings ratio, the stock is currently trading at 8.25 on a forward 12-month basis, lower than 14.09 for the Retail - Apparel and Shoes industry. Also, it is trading lower than its median of 9.78.
Image Source: Zacks Investment Research
The recent market movements show that Gap’s shares have gained 3.1% in the past three months compared with the industry's 7.1% growth.
Image Source: Zacks Investment Research
Other Stocks With the Favorable Combination
Here are a few companies that, according to our model, also have the right combination of elements to come up with an earnings beat this reporting cycle:
Dollar General Corporation (DG - Free Report) has an Earnings ESP of +8.66% and a Zacks Rank of 2 at present. DG is likely to register increases in its top and bottom lines when it reports third-quarter fiscal 2026 numbers. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for quarterly EPS of $1.40 suggests an increase of 9.4% from the year-ago quarter’s reported number. The consensus estimate for quarterly revenues is pegged at $11.1 billion, suggesting growth of 4.5% from the prior-year quarter’s reported figure. DG has a trailing four-quarter earnings surprise of 19.1%, on average.
Ulta Beauty Inc. (ULTA - Free Report) currently has an Earnings ESP of +1.84% and a Zacks Rank of 2. ULTA is expected to register increases in its top and bottom lines when it reports third-quarter fiscal 2026 results.
The consensus mark for revenues is pegged at $2.99 billion, indicating a rise of 4.5% from the figure reported in the year-ago quarter. The Zacks Consensus Estimate for quarterly EPS of $5.60 suggests a drop of 9% from the year-ago quarter. ULTA has a trailing four-quarter earnings surprise of 7.6%, on average.
Bath & Body Works, Inc. (BBWI - Free Report) currently has an Earnings ESP of +13.43% and a Zacks Rank of 2. BBWI is likely to register declines in its top and bottom lines when it reports third-quarter fiscal 2026 numbers. The consensus estimate for quarterly revenues is pegged at $1.5 billion, suggesting a decline of 3.2% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for quarterly EPS of 11 cents suggests a decrease of 68.6% from the year-ago quarter’s reported number. BBWI has a trailing four-quarter earnings surprise of 43%, on average.