• Gap raised its forecasts ahead of the holiday season, touting a “good start” to the all-important fourth quarter.
• The clothing giant behind Old Navy, Banana Republic, Athleta and its eponymous banner beat Wall Street profit estimates despite a difficult quarter marked by unusually hot weather and hurricanes.
• Gap is in the midst of a turnaround under CEO Richard Dickson, who has focused on better marketing to drive cultural relevance.

Hurricanes and unseasonably warm weather affected sales of Gap during its fiscal third quarter, but the clothing company still reported better-than-expected results, leading it to raise its annual forecast for the third time this year.

Gap, which runs Old Navy, Banana Republic, Athleta and its namesake banner, now expects its fiscal 2024 sales to rise between 1.5% and 2%, compared with previous forecasts of a “slight rise”. That’s ahead of the 0.4% growth expected by LSEG analysts, and bodes well for the all-important holiday shopping season, which is now underway.

The company also expects its gross margins and operating profit to increase more than expected.

Here’s how the nation’s largest specialty clothing retailer performed compared to what Wall Street expected, based on a survey of analysts by LSEG:

• Earnings per share: 72 cents versus 58 cents expected
• Income: $3.83 billion versus $3.81 billion expected

Gap’s reported net income for the three months ended Nov. 2 was $274 million, or 72 cents per share, compared with $218 million, or 58 cents per share, a year earlier.

Sales reached $3.83 billion, up about 2% from $3.78 billion a year earlier.

Across Gap’s business, unseasonably warm weather impacted sales by about 1 percentage point during the quarter, while storms and hurricanes caused overall store sales to decline by 2 percent, CEO Richard Dickson told CNBC in an interview.

“We had unusual circumstances, hurricanes, storms that led to almost 180 closures at the height of the impact,” Dickson said, adding that the storms most affected Old Navy, the largest brand in Gap in terms of turnover.

As soon as the weather improved, sales “bounced back” and the Christmas shopping season “got off to a strong start,” Dickson said.

“We’re excited about the holidays. Our teams are really focused on executing on our plans. If we compare ourselves to where we were last year, our brands are in a much more pronounced position than they were were last year,” he said. “We have stronger brand identities and we are more experienced in our much talked about playbook, delivering better products, better prices, more relevance, better consumer experience and excellence in execution. ”

Since Dickson took the helm of Gap a little over a year ago, he has worked to turn around the company after years of decline. Under his leadership, the company relied on nostalgic marketing and celebrity partnerships to reclaim its cultural relevance. Sales have increased for the past four consecutive quarters, but the company is still smaller than it once was, and critics say so. needs to do more to improve its product assortment and drive full-price sales.

Here’s a closer look at how each brand performed:

Former Navy: Gap said sales of its largest brand rose 1% to $2.2 billion, while comparable sales remained flat, below the 0.9% growth expected by analysts, according to StreetAccount. Old Navy’s children’s category has been particularly hard hit by the warmer weather, Dickson said.

Gap: Gap’s namesake banner grew 1% to $899 million in the quarter, while comparable sales rose 3%, better than the 2.3% growth Wall Street expected, according to StreetAccount. The brand has experienced four consecutive quarters of positive comparable sales and is benefiting from better marketing and products, the company said.

Banana Republic: The fashionable workwear line increased sales 2% to $469 million, while comparable sales fell 1%, slightly worse than the 0.8% drop StreetAccount expected. The brand worked to turn around its men’s business, which delivered results during the quarter. Overall, the company remains focused “on fixing the fundamentals,” the company said.

Athlete : The athleisure arm of the Gap empire increased sales 4% to $290 million, while comparable sales were up 5%. Results were not comparable to estimates. During the same period last year, Athleta’s comparable sales declined 19%. Under the leadership of its new CEO, former Alo Yoga boss Chris Blakeslee, the brand has managed to turn things around.