Question · Q3 2026
Carson inquired about the wrap-around effect of tariffs into 2026, the components of underlying gross margin expansion (AUR versus other drivers), and whether the confidence in the AUR plan suggests carrying those impacts into future quarters.
Answer
Katrina O'Connell, CFO, explained that Q3 margin strength came from commodity favorability, supply chain leverage, and AUR. For Q4, tariff impact is expected to be similar to Q3, with continued commodity benefits. The Q4 outlook assumes similar promotions year-over-year, and the AUR upside seen in Q3 is not currently factored into the Q4 guidance.
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