Warm Weather and Storms Hit Gap's Sales, but Holiday Season Looks Bright

Gap, the well-known apparel brand, had a bit of a rough third quarter. Hurricanes and unseasonably warm weather really took a toll on their sales. But, despite these challenges, they still managed to do better than expected. In fact, they even raised their annual sales guidance for the third time this year! Now, they're expecting sales to grow between 1. 5% and 2%. This is really good news as we head into the super important holiday shopping season. The company also thinks their gross margins and operating income will grow more than they initially planned. Their shares even jumped about 13% in extended trading after the news. Let's break down their performance: - Earnings per share were 72 cents, which was more than the expected 58 cents. - Revenue was $3. 83 billion, also higher than the expected $3. 81 billion. - Net income for the quarter was $274 million, or 72 cents per share, which is up from last year's $218 million. CEO Richard Dickson mentioned that the warm weather affected sales by about 1 percentage point, and storms led to store closures. But as soon as the weather improved, sales started to pick up again. Old Navy, the largest brand under Gap, saw sales grow by 1% to $2. 2 billion. However, comparable sales were flat, which was a bit lower than expected. The warm weather really affected their kids' category. The Gap brand itself did pretty well, with a sales increase of 1% to $899 million and a 3% growth in comparable sales. This is the fourth quarter in a row with positive comparable sales. Banana Republic's sales grew by 2%, but comparable sales dropped by 1%. They're still working on fixing the fundamentals, especially in their men's business. Athleta, the athleisure brand, saw a 4% sales increase to $290 million. Comparable sales were up by 5%, which is a big improvement from last year's 19% drop. Under their new CEO, they've made a strong comeback. Dickson has been leading Gap for over a year now and has been working hard to turn things around after years of declines. They've been using nostalgic marketing and celebrity partnerships to gain back some cultural relevance. Sales have been growing for the past four quarters, but the company is still smaller than it used to be.