Good afternoon, ladies and gentlemen. I would like to Welcome everyone to the Gap Q3 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. For those analysts who wish to participate in the question-and-answer session after the presentation, you may now press Star 1 to enter the Q&A queue. As a reminder, please limit your questions to one per participant. If anyone should require assistance during the call, please press the Star key followed by the Zero key on your touch-tone phone. I would now like to introduce your host, Whitney Notaro, Head of Investor Relations. Good afternoon, everyone. Welcome to Gap Inc.'s Q3 fiscal 2025 earnings conference call. Before we begin, I'd like to remind you that the information made available on this conference call contains forward-looking statements that are subject to risks that could cause our actual results to be materially different. For information on factors that could cause our actual results to differ materially from any forward-looking statements, please refer to the cautionary statements contained in our latest earnings release, the risk factors described in the company's annual report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2025, quarterly reports on Form 10-Q filed with the Securities and Exchange Commission on May 30, 2025, and August 29, 2025, and other filings with the Securities and Exchange Commission, all of which are available on gapinc.com. These forward-looking statements are based on information as of today, November 20, 2025, and we assume no obligation to publicly update or revise our forward-looking statements. Our latest earnings release and the accompanying materials available on gapinc.com also include descriptions and reconciliations of financial measures not consistent with generally accepted accounting principles. All market share data referenced today will be from Circona's U.S. Apparel Consumer Service for the 12 months ending October 2025, unless otherwise stated. Joining me on the call today are Chief Executive Officer Richard Dickson and Chief Financial Officer Katrina O'Connell. With that, I'll turn the call over to Richard. Thanks, Whitney, and good afternoon, everyone. We are very pleased to report Q3 results for Gap Inc. that exceeded our expectations across multiple measures, including net sales, gross margin, and operating margin. We've done this by executing our strategic priorities with precision and consistency. The reinvigoration of our iconic brands continues to gain strength. Our playbook, rooted in purpose, powered by creativity and executed with excellence, is working, and it's bringing consistency to how we operate and clarity to how we win. The momentum in the business is clear, from product design to storytelling, from store execution to digital engagement. The result is a company that's becoming more agile and performing with increasing confidence. On today's call, as usual, I'll provide an update on our Q3 performance and progress in the context of our four strategic priorities. Katrina will walk you through our detailed financial results and our financial outlook, after which we will open the call for questions. Let's start with financial and operational rigor. Gap Inc. comparable sales were up 5% versus last year, the highest quarterly comp in over four years. We were pleased to see our three largest brands, Old Navy, Gap, and Banana Republic, posting strong positive comps in Q3, demonstrating the resilience of our portfolio despite a challenging quarter for Athleta. We delivered operating margin of 8.5%, which benefited from growth in AUR as customers responded well to our brand offerings. We continued to strengthen our balance sheet, ending the quarter with strong cash balances of approximately $2.5 billion. Turning to our next strategic priority, driving relevance and revenue by executing on our brand reinvigoration playbook. This playbook, when applied with relentless repetition, creates a powerful flywheel, which has resulted in seven consecutive quarters of comp growth for our portfolio. Our largest brand, Old Navy, had an incredibly strong quarter, reflecting the brand's strength, consistency, and continued momentum. Comparable sales were up 6%, with the brand consistently gaining market share over the last two years. Customers responded to the compelling value proposition, resulting in healthy growth in average unit retail and notably across all income cohorts, which is encouraging despite widely reported macroeconomic pressure on the low-income consumer. Old Navy's consistent performance is being delivered by trend-right products, our strategic pursuit of category leadership, and compelling storytelling. The quarter began with a robust back-to-school season, reinforcing its leadership position in kids and baby in the U.S. Denim posted its highest Q3 volume in years, with growth across the family. Women's and girls showed particular strength driven by trend-right styles like barrel, wide leg, and baggy fits. Active delivered impressive double-digit growth in the quarter, with strength across the family. This demonstrates the strong customer response to the brand's distinctive value proposition in the active market and innovation, including new franchises like Bounce Fleece. Today, Old Navy is the number five active apparel brand in the U.S. and the number four brand in the women's active space. As we begin to drive more growth through strategic partnerships that amplify our brand relevance, our latest Disney collaboration kicked off the holiday season with our Jingle Jammys collection, which is exceeding our expectations, driving excitement across the family and fueling strong performance in the broader sleep category. Another great example is our first designer collaboration with American design legend Anna Sui. The collection brought high-fashion design to a broader audience, staying true to Old Navy's democratic and accessible brand promise. The campaign featured rising Gen Z artist PinkPantheress and resonated across platforms. In September, we announced plans for a strategic expansion into the beauty category, with a phased launch starting with Old Navy. As one of the fastest-growing, most resilient retail categories in the U.S., and customer insights that reinforce strong interest in the category, we see a clear and meaningful opportunity to grow in beauty. We recently expanded Old Navy's beauty collection in 150 stores, with select stores offering dedicated shop-in-shops and beauty associates. We intend to use this pilot to inform a thoughtful scaling strategy that will take us from seeding in 2026 to accelerating growth in the years that follow. Old Navy's Q3 performance reflects the strength of the team's work, which is clearly resonating. This brand continues to delight consumers and consistently deliver positive comps while reinforcing Old Navy's position as a brand that defines value, style, and accessibility in American fashion. This gives us confidence as we move into Q4 and beyond. Now, let's turn to Gap. Gap delivered another standout quarter, reinforcing the reliability of its execution and the compounded strength of our namesake brand. Comparable sales were up 7% on top of 3% comp last year, marking the eighth consecutive quarter of positive comps, with growth in average unit retail, consideration, organic impressions, and new customers, a clear signal that Gap's momentum is real, repeatable, and resonating. The quarter was fueled by broad-based strength in denim, the centerpiece of our viral campaign, Better in Denim, featuring global group Cat's Eye. This campaign demonstrated the power of the playbook in action, featuring trend-right product amplified by culturally relevant storytelling. With more than 8 billion impressions and 500 million views, Better in Denim culminated in a global cultural takeover and has become one of the brand's most successful campaigns to date, generating significant traffic and double-digit growth in denim. The results speak for themselves. Gap continues to accelerate, attracting a younger, highly engaged consumer, particularly Gen Z, who is discovering us while reinforcing loyalty with our core consumer. As Gap brand equity and relevance continues to build, the iconic Gap Arch logo hoodie is a great example of the brand reclaiming its place in the cultural conversation. During the quarter, we marked the 30th anniversary of the Gap hoodie with our first-ever Hoodie Day. It was a moment that energized our teams, drove connection with consumers, and contributed to the notable strength in fleece during the quarter. Our recent collaboration with Sandy Liang was another highlight, delivering strong results and continuing to position Gap as a platform for creative partnerships that drive relevance and new customer acquisition. For holiday, the brand is leaning into Cashsoft, where you'll see continued innovation with extensions into new silhouettes, on-trend sets, and vibrant colorways. Earlier this month, we launched our highly anticipated Give Your Gift holiday campaign, a continuation of our effort to bridge the gap across generations through music, creativity, and culture, featuring emerging artist Sienna Spiro. Gap's execution of the playbook has been fantastic, and it's been exciting to see the brand building on their success quarter after quarter while continuing to drive distinction and relevance. It's a brand that knows who it is, where it's going, and how to win, and we're looking forward to carrying that momentum into the holiday season. At Banana Republic, we continue to make steady progress. The work to strengthen its positioning, leaning into its heritage, is paying off. Comparable sales were up 4% in the quarter, reflecting meaningful traction as the brand's reinvigoration takes hold. Growth was driven by continued progress in the harmonization between men's and women's. Men's elevated fashion designs featuring distinctive textures and fabrications continue to perform well, and we've seen notable improvement in women's as fit and product refinement are resonating, particularly in dresses and Wovens. Building on the success of the brand's prior campaigns, the response to Banana Republic's fall campaign with David Cornswet was strong, breaking brand engagement records and fueling growth while expanding cultural reach and resonance. For the holiday season, Banana Republic is leaning into its distinctive position as the modern explorer brand. Our new campaign, shot in the stunning landscape of Ireland, captures this essence well, with our beautiful product featured in our travel-oriented storytelling brought to life through dynamic, destination-rich content. This approach is driving stronger brand affinity and proving to be highly impactful with our customers. Overall, Banana Republic's Q3 results reflect meaningful progress and continued momentum. I'm optimistic the brand is well-positioned as we head into the holiday season. Shifting to Athleta, Maggie Gauger, Brand President, has begun to make an impact in her first 90 days. She's taking quick and thoughtful action to begin to reorient the brand. This includes reorganizing the talent structure to align with her vision. The team is doing the right work, acting with speed and urgency to drive progress, but this reset will take time. Our focus is on positioning Athleta for long-term success, and we're turning it to its rightful place as a premium, aspirational brand. The brand is at the beginning of its reinvigoration journey. We aren't chasing quick fixes. We are taking a deliberate approach to position the brand for the long term. We're confident that the consistent application of our brand reinvigoration playbook, anchored in purpose and heritage, will guide Athleta forward. This is about returning to what made the brand great to begin with while reestablishing our clear and distinctive position in the active market. We're encouraged by the steps Maggie and the team have already taken, and we look forward to the continued impact of their leadership as Athleta's reinvigoration takes shape. As we head into the holiday season, our supply chain continues to power strategic advantages. The scale of our global network across sourcing, logistics, and fulfillment gives us the flexibility and resilience to operate with confidence. Our long-standing vendor partnerships and diversified sourcing footprint are enabling us to move with speed and deliver newness at the pace of demand. We've introduced new automation and AI capabilities across our omni-fulfillment network, from robotic unloaders to advanced storage and retrieval systems, which have increased productivity by nearly 30% compared to just a few years ago. This enables us to meet peak demand with greater speed, agility, and precision. With a fleet of about 2,500 stores globally and the largest specialty apparel e-commerce business in the U.S., we're positioned to serve our customers wherever and however they choose to shop this holiday season. Across Gap, our teams are inspired and energized by the work we're doing, and you can feel it. The work we're doing together to drive the business continues to ignite real energy inside the company, creating a culture that's united, motivated, and focused on execution. This is the culture that is carrying us into the holiday season, where our collective focus is clear: win with the consumer, deliver with excellence, and keep building on the progress we've made together. In the Q4, we remain focused on executing with excellence. Our Q3 and quarter-to-date performance positions us well for the holiday selling season and gives us the confidence to update our full-year outlook, increasing net sales growth to the high end of our prior range and raising our operating margin. We look forward to finishing the year strong and creating a clear runway to the next phase of our transformation as we move into 2026, building momentum. I'll now turn the call to Katrina for a closer look at our financials. Thank you, Richard, and thanks everyone for joining us this afternoon. We delivered exceptional Q3 results, surpassing our expectations across multiple key metrics. Our strategy is working. Growing brand relevance combined with operational and financial discipline drove our highest quarterly comparable sales performance in over four years, up 5%. We saw strong performance across the back-to-school and early holiday periods, underscoring the increasing resonance of our brands with consumers. With the playbook now in its second year, we're beginning to see a flywheel of growth take hold at Old Navy and Gap, with Banana Republic gaining traction. We exceeded our gross margin expectations with strong flow-through to our operating margin in the quarter, driven by rigor in the fundamentals. Average unit retail, or AUR, grew again this quarter, reflecting our compelling product offering and the disciplined execution across our teams. Our brand momentum, combined with our strategic supply chain actions, enabled a significant portion of the tariff impact on our margins to be mitigated. With the strength of our Q3 results and our quarter-to-date performance in mind, we are raising our full-year 2025 gross margin and operating margin outlook, with full-year 2025 net sales growth now expected to be at the high end of our prior guidance range. I'll take you through the details of our outlook shortly. We are entering the final stages of fixing the fundamentals. Consistent progress on our strategic priorities has strengthened our position as we move into 2026, where we will focus on building momentum and creating new growth opportunities. Now, turning to Q3 results, net sales of $3.9 billion were up 3% year-over-year, exceeding our expectations, with comparable sales up 5%. By brand, starting with Old Navy, net sales were $2.3 billion, up 5% versus last year, with comparable sales up 6%. It's exciting to see the brand winning in strategic categories like denim, active, and kids and baby, supported by strong execution of culturally relevant marketing and partnerships. Turning to Gap brand, net sales of $951 million were up 6% versus last year, and comparable sales were up 7%. Relentless, consistent execution of the reinvigoration playbook is fueling sustained momentum for the brand, clearly reflected in the Better in Denim campaign. Banana Republic net sales of $464 million were down 1% year-over-year, with comparable sales up 4%. Our foundational work on the brand, from elevated product to culturally relevant storytelling, is resonating with consumers and drove the second consecutive quarter of solid performance. Athleta net sales of $257 million decreased 11% versus last year, and comparable sales were down 11%. We are focused on applying the playbook with rigor, beginning with the fundamentals as we work to reset the brand for the long term. While we are eager for results, we are executing a phased plan that will take time. Let's continue to the balance of the P&L. Gross margin of 42.4% declined 30 basis points from last year but exceeded our expectations. As anticipated, tariffs pressured overall margin levels. However, lower discounting resulted in increased AUR growth driven by the consumer's response to our relevant product and storytelling. Compared to last year, merchandise margins were down 70 basis points due to the estimated 190 basis point impact of tariffs. This implies roughly 120 basis points of underlying margin expansion. ROD leveraged 40 basis points in the quarter. SG&A increased to $1.3 billion primarily due to the quarterly timing of incentive compensation and continued strategic investments. SG&A's percentage of net sales was 33.9%, deleveraging 50 basis points versus last year. Q3 operating margin of 8.5% was down 80 basis points compared to last year, which includes an estimated 190 basis points of tariff impact. This implies roughly 110 basis points of underlying margin expansion. Earnings per share in the quarter were $0.62, a decrease of 14% versus last year's earnings per share of $0.72, primarily due to the impact of tariffs. Now, turning to the balance sheet and cash flow, end-of-quarter inventory levels were up 5% year-over-year, primarily attributable to higher costs due to tariffs. Our disciplined inventory management resulted in slightly negative unit inventories, and we believe we ended the quarter with the right inventory composition. We continue to be rigorous in our approach to inventory for the balance of the year. As we shared on our Q2 call, we've tightened the way we purchase unit inventory to ensure maximum flexibility for various demand scenarios and to enable us to be more responsive to consumer demand. We expect to operate in line with our inventory principle of unit purchases positioned below sales. The last two years have been about fixing the fundamentals, which includes strengthening the balance sheet. We ended Q3 with cash, cash equivalents, and short-term investments of $2.5 billion, an increase of 13% from last year. Net cash from operating activities was $607 million year-to-date, and our free cash flow of $280 million year-to-date demonstrates the rigor we have put into managing the business. Capital expenditures were $327 million year-to-date. With regard to returning cash to shareholders, in Q3, we paid $62 million to shareholders in the form of dividends, and the board recently approved a Q4 dividend of $0.16 per share. Year-to-date, we have repurchased $7 million shares for approximately $152 million, achieving our goal of offsetting dilution. While we've achieved our goal, as always, we remain opportunistic. Now, turning to our outlook for fiscal 2025, I am pleased with the strength of our Q3 results and solid quarter-to-date performance, which are giving us the confidence to update our fiscal 2025 outlook. We've been operating against a dynamic backdrop for the last few years, and we're expecting the same for the Q4. Our outlook assumes a relatively consistent macroeconomic environment but acknowledges the potential for increasing uncertainties related to consumer behavior and global economic and geopolitical conditions. As a result, we continue to take a balanced view with our guidance and remain focused on controlling the controllables. Starting with full-year 2025 net sales, we are increasing our outlook to the high end of our prior guidance range and now expect net sales growth of 1.7%-2% year-over-year. Our outlook assumes ongoing strength at Old Navy, Gap, and Banana Republic, and a longer recovery at Athleta. Moving to gross margin. With our strong Q3 performance, we are raising our full-year gross margin outlook. We now expect deleverage of about 50 basis points year-over-year, driven by an unchanged estimated annual net tariff impact of approximately 100-110 basis points. Excluding the impact of tariffs, this would imply underlying gross margin expansion of approximately 50-60 basis points versus last year. Turning to SG&A, we continue to expect SG&A to leverage slightly for the full year. As discussed on last quarter's call, we are driving continuous improvement in the cost structure of the company this year as we rigorously drive $150 million in cost savings in our core operations through efficiency and effectiveness. We remain committed to reinvesting a portion of the $150 million into future growth projects, including beauty and accessories, as we pursue the long-term success of the company. A portion of these savings will also offset continued inflation. Now, we'll turn to fiscal 2025 operating margin. We now expect an operating margin of about 7.2% for the full year, an increase from our prior guidance range of 6.7%-7%. This continues to include the estimated net tariff impact of approximately 100-110 basis points. Excluding the impact of tariffs, this would imply meaningful underlying operating margin expansion of 80-90 basis points versus last year. Our income tax rate outlook for the year has increased to approximately 28% and primarily reflects the impact of changes in the amount and mix of our geographic earnings. This increase of one point versus our prior outlook of 27% represents an approximate 3% headwind to EPS. Looking to 2026, as we shared on our Q2 call, we do not expect the annualization of tariffs in 2026 to cause further operating income declines. We now expect the majority of the mitigation to come from adjustments to our sourcing, manufacturing, and assortments, with the balance driven by targeted pricing. We continue to be mindful of price elasticity and remain focused on maintaining the overall value proposition for our customers. While pricing is a lever to manage AUR, it is one of many we have been using to manage margin over time. Other levers include assortment mix, full-price sell-through, promotions, and inventory management. Our Q3 AUR performance and the momentum of our brands gives me confidence that our AUR growth plans are achievable. There will be a timing dynamic to the tariff impact on gross margin in 2026. We estimate a Q1 net tariff impact similar to Q4, followed by meaningful benefits from our mitigation efforts in Q2. The back half of 2026 should turn to a tailwind as our actions build and we lap most of this year's tariff impact. In closing, our Q3 results reflect strong execution of our reinvigoration playbook, driving consistency and growth across our largest brands. Continued cost discipline is enabling reinvestment in strategic growth opportunities, while our scale and supply chain strength support ongoing tariff mitigation. When we perform with excellence, it builds confidence. Confidence fuels execution. Execution drives growth. This flywheel is the engine of our momentum. As we look to deliver this holiday season, we remain focused on operational excellence and advancing our ambition to become a high-performing company that delivers sustainable, profitable growth and long-term value for our shareholders. I'd like to thank the team for their commitment to excellence and delivering results in support of our transformation journey. With that, we'll open up the line for questions. Operator? Thank you. We'll now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question. Again, it is star one if you would like to join the queue. Our first question comes from the line of Alex Straton with Morgan Stanley. Your line is open. Great. Congrats on a nice quarter. Maybe for Richard or Katrina, can you just dig in a little bit more on what drove such a strong comp acceleration at the Gap banner and also how you think about sustainable comp level for that business over time? Maybe for Katrina, just what surprised the upside versus your initial expectations on gross margin? Curious if tariffs played a role and how you think about steady state on that line item from here. Thanks a lot. Alex, thank you. First off, I think it's clear our strategy is working, and it is showing up in the momentum that we're seeing in our results. All three of our largest brands exceeding expectations. Navy up 6%, Banana Republic up 4%, and Gap delivered another standout quarter with a strong comp of 7%. That's on top of 3% last year, and it represents the eighth consecutive quarter of positive comps for us. This consistency is setting new records for the brand, and it's reinforcing our confidence in its long-term growth trajectory. Driven by compelling product assortments, partnerships, and marketing have really resulted in growth across all income cohorts. We have seen more high-income consumers choosing Gap, and we really do believe that with the strong competitive position that we've taken between premium and value and the fact that we're bridging the generation gap, it's a really exciting time to see Gap continuing to accelerate. We have been attracting a younger, highly engaged consumer, particularly with Gen Z, as they discover the brand, and it's reinforcing loyalty with our core consumer. The performance in the quarter, which, as you know, was fueled by our broad-based strength in Denim, the centerpiece of our viral campaign, Better in Denim, featuring the global group Cat's Eye, did incredibly well. I mean, we generated more than $8 billion impressions. I think we had over 500 million views. It was the Denim story everybody wanted to be part of. We increased our ranking in the Denim category. Gap is now the number six adult denim brand in the U.S., up from eight last year. Collaborations are continuing to drive relevance and revenue with our latest collaboration this quarter with Sandy Liang, which was incredibly successful, again attracting new, younger customers to the brand. It is exciting to see the brand just continuing to build on their success quarter after quarter. We are looking forward to carrying that momentum into the holiday season and beyond. As it relates to gross margin [crosstalk], sorry, I am going to finish up, Alex, for you on gross margin. For gross margin in the quarter, we did exceed our expectations in gross margin by over 100 basis points. That was actually driven by an inline expectation as it relates to tariffs. Tariffs of 190 basis points were as expected. The outperformance in the quarter really came from standout performance, particularly at Old Navy and Gap, and better than expected AURs as consumers really responded to our product and storytelling, which enabled us to have lower discounting in the quarter. Thanks, Alex. Our next question comes from the line of Bob Durbill with BTIG. Your line is open. Hi. Good afternoon. I was just wondering if you could expand a bit more on AUR trends, how you're managing AUR trends, and I guess just the growth plans that you've spoken about as you look forward to maybe Q4, but even into 2026. Thanks. Thanks, Bob. We approach pricing as we always have. I mean, we consider all the various inputs while maintaining our overall value proposition for consumers. In Q3, as our brands continue to gain more relevance and the rigor that we put around inventory management, as that becomes more foundational, we are increasing our price elasticity, and we've been driving higher sell-through at full price. We did take select pricing in Q3 in select categories, denim, which saw double-digit growth. The strength of our execution is really resonating with customers. We saw growth, as I mentioned, across all income cohorts. The sales were driven by both units and AUR. We had overall AUR improving versus last year. We saw particular strength in Old Navy and Gap with customers that were really responding well to our style, the quality, and the value, which we continue to advance. Banana Republic AURs also were strong. This is resulting in less discounting, better regular price sell-through, and it's giving us confidence that we can continue to drive AUR growth as we enter the fourth quarter. Our next question comes from the line of Matthew Boss with JP Morgan. Your line is open. Thanks, and congrats on a really nice quarter. Thanks, Matthew. Richard, could you speak to drivers of the top-line inflection that you saw at Old Navy this quarter? Any change in momentum, early holiday, and relative to the consistency that you've now clearly shown at the Gap concept? I guess, how do you see Old Navy differentiated as it relates to the market share opportunity for that brand? Katrina, just given actions that you've taken to the cost structure, how best to think about annual operating income dollar growth if low single-digit top-line was the baseline multi-year moving forward? Matthew, thank you for the question. Thrilled to talk about Old Navy. We had an incredibly strong quarter. Comps were up 6%, with the brand consistently gaining market share over the last two years. It is the number one specialty apparel brand in the U.S. The performance this quarter really speaks to the brand's strength, consistency, and continued momentum. Customers are responding to what Old Navy does best. We give great style at great value. We saw healthy growth across all income cohorts. In AUR, it was driven by trend-right product, which, again, was amplified by compelling creative and better storytelling for our brands. We have been winning in the categories that we have been strategically pursuing with intent. We have shared those along the way. Kids and Baby, Denim, and Active have all been driving the momentum. Active, in particular, was a standout in the quarter. We delivered double-digit growth. I believe it's underscoring the power of our value proposition and innovation. Differentiation as it relates to the market share opportunities that we see. We look at partnerships. Disney's partnership with us. We just presented Jingle Jammies, which was an incredible presentation across the family. It exceeded expectations. We just also introduced Anna Sui's collaboration with us, which was particularly meaningful as the first designer collaboration where we're bringing high fashion to a broader audience. All of this while we're just beginning to expand the brand into beauty, which, of course, is early days, but we see incredibly high potential opportunity for Old Navy for that category and the broader portfolio over time. I am thrilled with Old Navy's consistency and the quarter performance. I actually am particularly excited about our holiday offering at giftable price points. We are ready to execute with excellence. Matt, as it relates to your other question, I would say, as you called out, we've done a lot of restructuring over the last few years. This year, we previewed that we're saving about $150 million in our cost structure. We are reinvesting a portion of that into future growth opportunities because we want to be able to seed this next phase, which we're saying is building momentum that we hope over time leads to accelerated growth. Balancing the savings with what we think are important investments for the long term. What I would say is this year, the operating margin that we've guided to of about 7.2% is really only modest deleveraged compared to last year. That's while absorbing 100-110 basis points of operating—excuse me—of tariff impact, which does show the way we are managing the business with rigor, both through cost and margin improvements. As we look forward, we have also said that in 2026, we do not expect the annualization of tariffs to cause further operating income declines as we work hard to mitigate those costs. Once tariffs are fully reflected in the base, we do believe the consistency in our core, combined with top-line benefit related to the high potential growth opportunities that we are seeding in 2026, should provide sales growth that benefits operating income over time. More to come on what that algorithm turns out to be. We feel good about the work we have been doing, and we are certainly pleased with our results. Thanks, Matthew. Yeah. Pardon me. Our next question comes from the line of Brooke Roach with Goldman Sachs. Your line is open. Good afternoon, and thank you for taking our question. Richard, how do you feel about the store fleet today across brands and banners? Are there any investments that need to be made to fuel the momentum from a shopping experience perspective? What does that mean regarding store fleet transformation, whether that's remodels or changes in store count as you look ahead into 2026? Thanks for that question. Stores are a really important way for customers to experience our brand. I mean, they bring our product, storytelling, and service to life in a way that digital just can't. With a company operating a fleet of about 2,500 stores, we are always optimizing our retail footprint. We're closing underperforming stores. We're repositioning some locations that are more relevant to our customers. We evaluate new store openings. As you know, over the last several years, we've closed about 350 stores that were unprofitable. Last year, we closed about 56 stores across our portfolio. We expect to close approximately another 35 in fiscal 2025, with the majority of those closures being specific to Banana Republic. I believe we're at a pivotal point right now where the fleet is really well positioned. We've been testing new formats and experiences. Gap Flatiron in New York has been functioning for about a year with great learnings that we've started to expand across our Gap fleet with Denim Shops, new refresh shop here in San Francisco, and a variety of others that are on plan. Banana Republic, specifically in Soho and other locations that we've been refreshing with some great results. Of course, Old Navy and Athleta up at bat. We continue to evaluate these tests and their performance and are getting more and more confidence in the revenue and relevance and the strong returns that they've been driving. We've begun to invest rationally and selectively in the areas that we think will drive the return that we're looking for. We will continue to keep everybody posted as we look to the combination of repositioning our stores, refreshing must-win stores, and again, looking to start to open up new stores where it makes sense strategically. Thanks so much. Thanks, Brooke. Our next question comes from the line of Adrienne Yih with Barclays. Your line is open. Good afternoon. Congratulations. Great to see the progress at the right time. Richard, my question for you is sort of a little bit higher level. Since you've come, there's such a focus on product and marketing, the combination of the flywheel effect of those. How has the appointment of design and creative, specifically that pose and change the complexion of creative thinking throughout the organization? The marketing piece of it, how has that kind of complement kind of the product and creating that flywheel? Thank you, Adrienne, for the question. First off, let's just mention Zach. He's been an incredible addition to our leadership team. It's been almost two years ago now that he's joined and has brought significant impact on many creative aspects, I would say both inside the company and beyond. Our objective collectively with Zach and by elevating the creative conversation across our brands, highlighting design and product as an incredibly important attribute to all of our brands, has been working. I mean, we've been culturally creating moments, curated moments where our brands and our products have taken center stage, not only to some extent on the runway, but on Main Street. We're attracting talent as well to our portfolio that might not have considered a place like Gap Inc. or our brands prior. When we talk about marketing, which I also am pleased to talk about, we know marketing is a much more complex function today than it was in the past. As you know, we've been working really hard at driving new narratives that put our brands back into the cultural conversation. It's our job to be everywhere that our consumer is with the right creative messaging. I think it's obvious we're performing while we transform. We're driving digital dialogue messages with social media as the number one platform for our consumers. Influencer content is among the most common product discovery methods amongst Gen Z and millennials, which we've been performing incredibly well with. We actually recently launched a cross-brand content creator and social media advocacy program last month, which you might have seen. We now also have a presence on TikTok as a shop and many more. These methodologies are proving really impactful, but they also require higher quality, accelerated amounts of creative. Lastly, we can't help it but mention again, Cat's Eye is a great example of that. I mean, 8 billion impressions, 500 million views. This was a true cultural takeover. I think it's another proof point in our playbook. We believe we've got the means and the experiences and the brands to continue to be more effective and be more efficient in our spend as we've proven this methodology is working and it will continue to propel us into the future. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is open. Hi, good afternoon, everyone. Congratulations on the nice progress. Katrina, one for you, one for Richard. As you think about the tariff mitigation strategies, which seem to be effective, the pricing adjustments have seemed to become less and less. Is that the right impression and how you're thinking about pricing going forward? Richard, the acceleration in store sales is impressive. In your view of the consumer overall, how are you thinking about the consumer? Does it differ by brand, lower and higher income customer, whether it's Gen Z, millennial, or baby boomer? How do you think the current feeling is in the additive towards merchandising? How do you think of consumer demand? Thank you. T hanks for the question. I think I'm going to jump in here and take consumer first. Then Katrina can follow up with tariff mitigation answers. First, I think it's really important to share. We're seeing consistency and strength in our customer behavior. As I mentioned, we're really proud that we're winning with all income cohorts. You can see it with the strong differentiation within our portfolio. Together, we see equal growth across low, middle, and high. It's evidenced by our two largest brands, Old Navy and Gap. There is external data that points to, of course, the macro pressure on the low-income consumer. Our customers are finding our price value, our product, our styles. It's breaking through the competitive landscape, and we're winning. We're also doing this, Dana, with less discounting. We've got better regular price sell-through, increased AUR, which is really indicating that our product is resonating. I think you can see it when you go into our stores. We're just telling better merchant-driven stories. It is supported by incredibly relevant marketing. We're also excited to see that the high-income consumer is discovering our fashion, quality, and value. We think that is also being driven by the relevant narrative that we've been creating in the marketplace. When I step back and I look at our portfolio competitively, I think our portfolio appeals to a wide range of consumers. It gives us greater flexibility in today's environment. When we look at our portfolio today versus even a few years ago, we are much stronger portfolio brands today. We're resonating with consumers. It is our job on a day-to-day basis to create great product with great style and quality, exceptional value. I think we will prevail in any marketplace if we stay consistent and true to that narrative. Over to you, Katrina, on tariffs. Sure. As it relates to tariffs, we did do a slight amount of pricing in the quarter. We really, honestly, Dana, approach pricing as we always do. We look at all the various inputs really with an eye to maintaining the overall value proposition for our consumers. We did take select pricing in select categories. I think denim is a really good example at Gap where, given the strength, we were able to take slight pricing and see double-digit growth in sales in spite of that. The strength of our execution, as Richard said, really is resonating with our consumers. As Richard said, we saw sales come from both units and AUR in the quarter. I would say the bigger driver of the outperformance in the quarter and what we're seeing is less discounting and better regular price sell-through. I think, as Richard said earlier, that really gives us the confidence that we can keep driving AUR growth as we enter the holiday season. Thanks, Dana. Our next question comes from the line of Lorraine Hutchinson with Bank of America. Your line is open. Thank you. Good afternoon. Just switching gears to Athleta for a minute. How do you feel about the level and content of the inventory there? Do you have a timeline for when you think that sales could begin to stabilize? Lorraine, thank you for that question. We're not hiding from Athleta. It's a very important brand in our portfolio. We have been disappointed in the trend. Maggie, our brand president, has hit the ground running in her first 90 days. She's balancing near-term priorities with, of course, the longer-term reinvigoration objectives that we have for the brand. As I mentioned, she's been building her leadership team to align with her vision. She is truly setting the foundation for the brand's next chapter. A lot of work happening, editing the assortment, studying the consumer, evaluating our retail footprint, and, of course, the overall customer experience. This is a reset year for Athleta. Our focus is going to be on positioning the brand for long-term success and returning it to a rightful place as a premium, purpose-driven, aspirational brand. We do believe Maggie and the team are taking the right steps. We remain confident that Athleta will emerge as a brand that really does matter even more to women through product, trend, and storytelling. We understand there is a lot of work to do, but we believe we have the right leader in place to do it. We look forward to continuing to update you as more news unfolds. What I would add, Lorraine, on inventory is, as we assessed Athleta in the second quarter, given the trend in the business, we did make some choices to lower inventory levels overall. We have aligned inventory for Athleta to this lower sales trend as we head for Q3 and as we head into Q4. We feel good about the levels and quality of inventory at Athleta. We will remain pretty prudent as it relates to Athleta until we start to see the product and the marketing get back to where we would expect it to be for this brand. Thanks, Lorraine. Our next question comes from the line of Paul Lejuez with Citigroup. Your line is open. Hey, thanks, guys. Just to go back to the unit comment, I am curious which brand you saw the greatest increases in units. I am also curious on the inventory versus unit gap that you mentioned. What will that look like at the end of the year, as we finish up fourth quarter and then into the first half of 2026? Thanks. Paul, I'm going to take the first one, but we had a lot of trouble hearing your second question. Apologies on that one. We're going to ask you to repeat it. As it relates to units, we were really pleased to see that as our brands are gaining relevance, combined with the rigor that we're putting into the business, we're seeing our elasticity improve. We're getting higher sell-throughs at regular price. When we look at the units in the quarter, I would say units were aligned with where we see outperformance in the business, particularly at Old Navy and Gap. We also saw AURs there as well. I'm going to ask you to repeat again the second part because we couldn't hear you. Sure. Sorry, Katrina. The inventory dollars versus unit gap that you spoke of this quarter, curious what that looks like at the end of 2004 Q4 and then into the first half of next year. Oh, thanks. Sorry about that. We continue to keep our units below sales as we try to keep within our principles of keeping inventory tight. We want to keep maximum flexibility so that we can respond in season to various demand scenarios and be responsive to consumer demand. As we think about end-of-quarter inventory, I would expect it to be similar to how we just ended Q3. Thanks, Paul. Thanks, Paul. Our next question comes from the line of Corey Tarlow with Jefferies. Your line is open. Great. Thanks so much for taking my question. Richard, I wanted to ask about the power of partnerships. The reason being is I do not think that there is a retailer in the mall today that has done more partnerships in the time span that you have been at Gap to expand the aperture for the brand and to build, as you say, relevance and revenue. I was curious about what you think strategically this means for the business ahead. The follow-up to this is how have the consumers responded to these improvements in the brand in the way that you have been able to, say, remove promos on categories like denim at Gap? Okay. Corey, thank you for the question. First off, I think it has been a credit to the brands and teams that have followed the methodology that we shared with our playbook. As part of the playbook, when we look at cultural relevance, collaborations help a brand drive relevance. It broadens its customer base and continues the drumbeat between its larger partnerships and releases. It keeps topical in the context of the amount that we do and the timing that we do do them. You have to really be authentic. It's not just a collaboration. It's a well-thought-out strategic partnership. To date, Gap Brand, as you mentioned, we've launched over 13 collaborations. It continues to drive enormous excitement and attract new audiences to us. They're very precise. They need to be. They need to be win-win. Most importantly, they need to be authentic to the consumer. The collaborations that we've been doing, as I mentioned, are attracting new generations to Gap. It is also, at the same time, reinforcing the brand to those who love us for years. This is, to some extent, a balance of art and science. The latest collaboration this quarter with Gap Brand with Sandy Liang in the third quarter, it drove incredible engagement and overall basket. You asked about consumers responding in relation to it and how it affects our business. I mean, more than 25% of the customers who shop these collaborations were new to Gap. And of those who shop the collaborations, 20% shop beyond the collab. We see the attraction that these collaborations, when done right, are generating for the brand. By offering and showing other product, we are now establishing broader, bigger house files and more exciting relationships with our consumers. We just launched the Anna Sui collection with Old Navy, which is the first designer collaboration in Old Navy. Incredible success, similar engagement, a really well-thought-out, precise partnership. We believe a sign of things to come. Again, laddering up, it's great credit to the teams across the brands for driving the playbook, executing it with excellence, and really creating win-win collaborations for the consumer and our business. Our final question comes from the line of Michael Benetti with Evercore ISI. Your line is open. Hey, guys. It's Carson on for Michael. Katrina, probably a question for you. Appreciate the color on the wrap-around effect of tariffs into 2026. If we set tariffs aside, you had really nice underlying gross margin expansion in third quarter. The guidance implies pretty similar for fourth quarter. How much of that underlying expansion is from AUR versus other drivers? Because I think I heard several times today, confidence in the AUR plan. If that's a leading driver, is it safe to carry those impacts over into the next few quarters? Thanks. Thanks for the question. The way I would answer that is our margin strength in Q3 came from a combination of favorability in commodities aided by some supply chain leverage that we got, as well as strength in AUR. As we look to Q4, what you'll see is that the tariff impact to Q4 is similar to what we just experienced in Q3. We're also still seeing the commodity benefits. In Q4, we're trying to sort of stay balanced in our outlook. Right now, what we have in is roughly similar promotions year- over- year so that we have room to compete in any environment. We will obviously aspire to do better. The upside that we saw in AUR from Q3 is not currently assumed in Q4. Ladies and gentlemen, that concludes our question-and-answer session. I will now turn the conference back over to Mr. Richard Dickson for closing remarks. Thank you, operator. This was an exceptional quarter. I am really proud of this talented team that continues to deliver quarter after quarter. As we look to finish the year strong, our team is fired up and our focus is clear. Continue to execute with excellence and win with the customer this holiday. Thank you for joining us today. For those of you who celebrate, wishing you a happy Thanksgiving. We look forward to seeing you in our stores this holiday season. Thanks, all. Ladies and gentlemen, this concludes today's call. We thank you for your participation. You may now disconnect.