Bloomberg Audio Studios, podcasts, radio news. Bloomberg's Lisa Bromwitz joins us now and she is sitting down with the CEO of the Gap.
Lisa, thank you so much.
Matt.
Yeah, we do have Richard Dixon, who is the CEO, the not so new chief executive officer of GAP Incorporated since twenty twenty three. Great to see you, Richard, Thank you for being with us. I want to start you definitely were one of the winners this retail season, with beats across the board, increasing your full year forecast. I'm wondering how much the key to success this season in retail is catering to wealthier investors who can spend more at a higher price point.
Well, first off, thank you. It's clear our strategy is working and it is showing up in the momentum, and we're seeing that in the results. We've had consistent strength from our consumer behavior that we're winning actually with all income cohorts. When you look at the overall sales comp up five percent. That's the seventh consecutive quarter of positive comps for US. Our leading brand, Old Navy, the largest brand,
delivered an outstanding quarter. We were up six percent gap up seven percent, be nan A Republic up four percent, gross margin exceeding expectations. So from an overall perspective, what we see and are approving is consistency in the context of our strategy and our playbook. As we look at consumers, we do see the consistency and strength with our customer
behavior and we've been winning with all income cohorts. As you could see from the differentiation in our portfolio, we saw equal growth across low, middle, and high and while we're seeing external data points to macro pressure, particularly in the lower income consumer, our customers are finding our price, our value, our style, breaking through the competition, and ultimately we're very excited to be winning in the marketplace, giving us a lot of confidence as we head into the holiday season.
Yeah, talking about the holiday season, how robust you expected to be, how is it coming along, and how much our consumer's resilient even in the face of price increases.
Look, holidays come every year. We're off to a great start. We have great activations that are planned this holiday. In particular, I'm very excited about certain categories denim, sleep where fleece. These look really strong. Our value proposition, our marketing executions. Hopefully you've seen some of the creative when you go online to our sites. We're well positioned to serve our
customers wherever and however they choose to shop. We just, for example, Old Navy did a partnership with door Dash, which provides convenience for tens of millions of users. Our stores are ready, our teams are fired up, and we're looking to a strong finish to the year.
So Richard, I expect you actually coming on and dancing to milkshake in the background because I hear you talking about some of the cultural relevance and I wonder how much the battle for cultural relevance has been front and center for you about that viral ad. How much are you looking to new partnerships and new types of advertising as a way to really drive gap strategy.
Cultural relevance is a very important part of our playbook, and we talk about relevance with revenue. You can have relevance but not revenue, and so the key to success is when you have relevance that drives revenue. And collaborations do help brand relevance. Now, it has to be the right collaboration and a win win methodology, but it does do a really good job broadening its consumer base when it's done well and continue the drum beat between bigger
and larger releases. So to stay in the cultural conversation, Gap brand has launched over thirteen collaborations that continue to just drive excitement and surprise. But what I will say is that these are very precise and as I said, it need to be win win and authentic to the customer. They do attract different audiences. In the Cat's eye case, we did an extraordinary job continuing to introduce and discover Gap to gen Z, which has been a really exciting
segment for us. We got eight billion impressions five hundred million views for the Better in Denim campaign. It was literally a global takeover and it's become one of the brand's most successful campaigns to date. We drove credible traffic and of course double digit growth in Denham.
I have to ask for sure was this a direct response to American Eagle's Sydney Sweetead.
Look. I think the fashion industry is proving creativity and competitively. We love the fact that there's lots of different conversations around fashion and particularly denim. We are front and center with our strategies. We did a better in Denim campaign that was specific to gap, expressing our originality and to some extent, sometimes it's convenience and sometimes it's ironic. But I think in the context of the denim dialogue, we certainly had our fair share of goodwill.
The denim wars continue, Richard, we just have just a bet a minute left. I'm curious going forward how much you are seeing sort of that teriff related impact on pricing, how much has already been factored in, and how much going forward you expect to still have to pass through.
Well, I would first call out our team. We have done a great job with our mitigation plans, which we've shared many times. It's been focused and thoughtful, making adjustments to sourcing, manufacturing, our assortments, and many other actions, and all of those actions were designed for the reaction of our consumer to continue to have our value, quality, and
style portrade, which is most important. The third quarter tariff impact was one hundred and ninety basis points, but that was in line with our expectations, and despite this, we actually exceeded our gross margin outlook, which was driven by top line momentum, less discounting, better regular price sell through. So we're going to continue to pursue our mitigation plans, but we remain focused most importantly style, quality and value for our consumer.
Richard Dixon. Wonderful to catch up with you, thanks so much on the quarter. Wonderful to get your perspective that was GAP CEO, Richard Dixon,