• by Sarah Mahoney  @mahoney_sarah, Yesterday

Gap Inc. delivered another quarter of better-than-expected results, with growing evidence that its reinvention strategy — and marketing reboot — is winning over consumers. With comparable sales up 2%, ahead of forecasts, and its two largest brands gaining share, the company says creative messaging, cultural relevance, and sharper audience targeting are helping it punch above its weight.

“We’re generating more revenue, more relevance,” said president and CEO Richard Dickson in an earnings call webcast for investors. “We actually are spending less marketing dollars… and the metrics are really proving it.”

Old Navy, which accounts for 58% of company revenues, is leading the charge. Comparable sales rose 3%, the ninth straight quarter of market share gains. Activewear, now central to the brand’s growth strategy, continues to surge. Dickson called it a “strategic pursuit” and said Old Navy is now the No. 5 player in the active category.

He called out the recently launched “Old Navy, New Moves” campaign, featuring Lindsay Lohan, Dylan Efron, and Charo, which riffs on 1980s workout nostalgia to spotlight style, value and family-inclusive fitness. “With our active product resonating, we’re amping up the storytelling,” Dickson said.

Old Navy is showing “better execution on the shop floor, strong assortments in areas like athleisure,” writes Neil Saunders, managing director at GlobalData, in his note on Gap’s results. “Good prices and promotions all helped nudge the family shopper into spending.”

The Gap banner is also picking up steam, posting a 5% gain in comparable sales and the eighth consecutive quarter of market share growth. Again, Dickson credited sharper marketing and cultural connections with the gain, including the recent “Feels Like Gap” campaign featuring Parker Posey.

Dickson described the marketing shift as “a reinvigoration playbook,” saying the brand is building “identities that separate our portfolio from each other.” He said the company is focused on being “everywhere our consumer is with the right creative messaging,” with particular attention to influencer and social content for Gen Z and millennials.

“Gap is speaking for itself, and people are speaking about Gap,” Dickson added.

Saunders called the rebound “particularly impressive,” emphasizing that “the mission to make Gap relevant again… is working.”

While Banana Republic posted flat comps, its "White Lotus" collaboration generated over 3 billion impressions and brought in new customers. The brand continues to align product and design across genders, with Dickson citing “ongoing product improvements” and encouraging momentum in women’s apparel.

Athleta, meanwhile, remains a drag on results, with sales down 6% and comps off 8%. “There’s more work to do,” Dickson acknowledged, noting the brand is still resetting product and marketing to better align with its core audience. Morningstar’s David Swartz remained cautiously optimistic, saying Athleta “has strong potential in the attractive women’s athleisure category” and could return to growth by 2026.

For Gap Inc. overall, digital sales rose 6%, now representing 39% of total revenue. Gap Inc. remains the No. 1 branded apparel ecommerce company in the U.S., with nearly 1.5 billion annual visitors. Still, looming tariffs threaten momentum, and the revelation that new duties may cost the company $100 million to $150 million after mitigation efforts rattled investors.

Company execs acknowledged the uncertainty but remained upbeat. Katrina O’Connell, CFO, told investors the company is confident in its turnaround strategies and continues to forecast that sales for the full year will be up between 1% and 2%: “We believe great brands can win in any environment.”