Gap Inc (GAP) Stock Forecast & Price Target

Gap's total sales increased by 3.0% year-over-year to $3.942 billion, surpassing expectations and reflecting a successful re-establishment of its brand identity. The company ended the third quarter with $2.5 billion in cash and short-term investments, representing a 13% increase, which strengthens its financial position. Despite challenges from tariffs impacting inventory levels, ongoing improvements in sales and gross margin leverage highlight Gap's effective management strategies and ability to drive growth.

Gap Inc. has experienced a concerning decline in gross margin, with a drop of approximately 30 basis points to 42.4%, which was greater than anticipated and reflects ongoing tariff pressures and poor merchandise margins. Additionally, the company reported an 11% year-over-year decrease in comparable store sales for the third quarter, compounding previous declines and highlighting weak demand trends across its brands. Athleta's sales also reflected a troubling trend, decreasing 11.4% year-over-year, mirroring the negative performance from the prior quarter and indicating persistent challenges in the activewear segment.