In the third quarter, a mix of strong consumer demand, disciplined inventory management and strategic pricing helped specialty retailers deliver solid performances despite persistent geopolitical challenges.
Across the sector, retailers leaned into product newness, category momentum and physical retail investments, while executing cautious but proactive inventory and pricing strategies. Sales were fueled by a mix of higher tickets, better full-price sell-throughs and private brands. Denim proved to be a strong category across retailers, including Abercrombie, Buckle, The Gap, Hollister, Old Navy and Anthropologie.
Tariffs remained a headwind, prompting ongoing mitigation efforts—ranging from vendor negotiations to targeted price increases—as retailers navigate the holidays and plan for spring.
Abercrombie & Fitch, Co.
- The quarter is the twelfth consecutive quarter of growth for Abercrombie & Fitch, Co.
- The company is investing in physical retail. For Hollister, it is on track to open 25 stores this year and to refresh more than 35 stores. The company has opened 30 new Abercrombie stores through the third quarter, aiming for a total of 36 this year.
- Guidance: The company raised its full year 2025 guidance for net sales growth to 6% to 7%, up from previous guidance of 5% to 7% and raised its EPS to $10.20 to $10.50, from $10.00 to $10.50.
Inventory
The company reported inventory units were up 1% at the end of the quarter. Costs were up 5% YoY, with tariffs representing about 3% of that total. The company managed inventory tightly at both Abercrombie and Hollister brands, which led to higher average unit retail (AURs) at both brands.
At Abercrombie, AURs were higher compared to the first half of the year, and at Hollister, tighter inventory helped the company introduce newer merchandise which kept the AUR higher with full-price selling.
Pricing
Management said that its team will continue to find cost efficiencies through vendor discussions to mitigate tariff headwinds as it plans 2026. The Q3 results include $60 million of adverse tariff impact (210 basis points).
The company announced that its mitigation strategies, including price increases, “will start to take hold” starting at the end of December into January with spring goods. “[The teams are] looking at country of origin footprint as well as finding expense efficiencies,” said SVP & CFO Robert Ball. “But while we haven’t moved tickets broadly through the holiday, we are taking targeted price increases here for the spring.”
Product
The Abercrombie brand has had a sequential improvement over the last two quarters, with net sales down 2% and comparable sales down 7% (compared to 2Q where net sales were down 5% and comparable sales were down 11%). The improvement was driven by the women’s seasonal transition categories across tops, bottoms and outerwear.
For holidays, sweaters, fleece and denim are the trending categories for Abercrombie. The brand is leaning into the qualities that its customers love – fashion, authenticity and comfort – and injecting newness into its holiday assortment.
Hollister had 16% sales growth and 15% comp sales in the quarter, with both men’s and women’s categories driving the growth. Hollister had a very strong back-to-school season, which the brand will transition into must-have seasonal pieces with campaigns and collaborations. Hollister launched a campaign with six college athletes that co-designed specific items in its collegiate collection for football’s rivalry week. Hollister is also collaborating with Taco Bell on 90s and Y2K styles on graphic tees and fleece, which launched on Cyber Monday.
CEO & Director Fran Horowitz-Bonadies highlighted the company’s strong position heading into holiday, saying, “We’ve got great momentum heading into holiday seasons. Honestly, almost every category is working.”
Buckle
- Online sales increased 13.6%; comp store sales increased 8.3%
- Buckle’s EPS of $0.96 outperformed the forecasted $0.94. Revenue also exceeded projections, coming in at $320.8 million above an expected $317.97 million
- Buckle opened two stores and completed two store relocation projects in the third quarter. Through November 21, the company opened six new stores, remodeled 17 and closed three locations. Buckle ended the quarter with 442 retail stores in 42 states, compared to 445 stores in 42 states as of the end of the third quarter last year.
Inventory
Inventory levels were up by 11% year-over-year (YoY) at the end of the quarter. At the end of 3Q, merchandise margins were down 10 basis points due to the increase in costs with tariffs and the decrease in the private label business. Specifically, in 3Q 2025, private label business accounted for 47.5% of the total business, compared to 48.5% in 3Q 2024.
Pricing
The company had price increases throughout its portfolio, led by the highest increase in women’s denim and women’s general merchandise. The women’s business grew to 51% of Buckle’s total business portfolio, compared to 47% of the total in the year-ago period.
Women’s denim led the quarter, with prices increasing by 17.5% with average prices from $81.15 in Q3 2024 to $86.95 in the current period. The increase was led by the Buckle Black label and other national denim brands. Across women’s general merchandise, including knits, sweaters, casual bottoms and accessories, prices increased by 6% from $49.95 in Q3 2024 to $53.05 in Q3 2025.
Average men’s denim prices increased by 1% from $88.10 in Q3 2024 to $88.15 in Q3 2025. Overall men’s general merchandise price points increased by 2.5% from $54.30 in Q3 2024 to $55.70 in Q3 2025, with short and long-sleeve tees, vests, jackets, and accessories performing well during Q3 2025.
Consumer behavior
Dennis Nelson, President and CEO, Buckle said that the company has not seen a big change in the health of the US consumer. He said, “There’s probably a slight caution in some, as our units per sale are off very slightly. Overall, we feel good about it. If the guest is excited about the product and the quality we have, it’s been going pretty well.”
Product
The women’s denim business has a variety of styles which are selling at higher price points across both fashion brands and private labels. The kids’ business increased 22% year over year (YoY), and this is a category that the team is building and growing.
Gap Inc
- Online sales increased 2% compared to last year and represented 40% of total net sales.
- Guidance: The Gap, Inc. raised its full-year guidance to 1.7% to 2.0% revenue growth, from 1% to 2% revenue growth.
Inventory
Ending inventory of $2.5 billion was up 5% compared to the year ago quarter, mainly attributable to higher costs due to tariffs.
The company ended the quarter with slightly negative unit inventories but Gap Inc.’s Head of Investor Relations Whitney Notaron noted it had the right composition. “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,” she said.
Pricing
The company estimates that tariff impacts on gross margin will occur in 1Q 2026 and 2Q 2026.
Gap Inc. is using targeted pricing to mitigate those impacts. Tariffs pressured overall margin levels; however, lower the company noted discounting resulted in increased AUR growth.
“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.” stated Katrina O’Connell, Gap Inc.’s chief financial officer.
Consumer behavior
The Gap, Inc. saw growth across all income cohorts, driven by units and an overall average unit retail (AUR) increase compared to last year, which means that customers responded more favorably to this season’s products, as demonstrated by improved full price sell through and less discounting.
Traffic and sales were up at the company’s biggest brands, Old Navy and Gap, driven by denim. Both brands had higher AURs.
Product
Old Navy denim had the highest volume in years, and its active, kids and baby categories also were highlights in the quarter. Old Navy also has partnerships including its latest Disney collaboration with Jingle Jammys and a designer collaboration with American designer Anna Sui.
Gap was strong in its women’s denim driven by the launch of Better in Denim ad campaign which featured Katseye (a six-member global girl group) which drove eight billion media impressions and over 500 million views. According to the company, The Gap is ranked the number six adult denim brand in the US, up from number eight last year. Women and girl’s denim highlights include barrel, wide leg and baggy fits, while active delivered double-digit growth due to the company’s Bounce Fleece.
Guess
- On August 20, 2025, Guess announced that it had entered into a definitive agreement to be taken private under a strategic partnership with Authentic Brands Group LLC and certain company shareholders. Under the terms of the transaction, Authentic Brands Group LLC will acquire 51% and the shareholders will acquire 49% of the company’s intellectual property. Shareholders will receive $16.75 per share in cash and upon completion, the Company’s common stock will no longer be listed on any public market.
- At a special meeting held on November 21, 2025, the Company’s stockholders approved the plan. The transaction is expected to close in the fourth quarter of Guess’s 2026 fiscal year.
- Guidance: Due to the proposed transaction, the company will no longer offer financial guidance.
Inventory
Inventory increased by 2.4% year over year.
Consumer behavior
The strongest performers in the quarter were Europe and the wholesale market. Europe revenues increased 10% in U.S. dollars and 6% in constant currency; wholesale revenues increased 28% in U.S. dollars and 26% in constant currency.
URBN
- Nuuly reported a strong 49% revenue growth, driven primarily by an increase of 118,000 average active subscribers compared to the prior year
- Urban Outfitters, Inc. plans to open approximately 69 new stores and close approximately 17 this year across its banners. The company is planning 25 new FP Movement stores, 18 new Free People stores and 16 new Anthropologie stores.
- Frank Conforti, Co-President and COO of Urban Outfitters, Inc., highlighted the positive performance, noting, “All brands delivered positive retail segment sales comps.”
- Guidance: Urban Outfitters Inc. expects high single-digit sales growth in Q4 and approximately 100 basis points of gross margin improvement for the fiscal year. The company anticipates mid-single-digit comparable sales growth across its brands and projects that Nuuly will deliver mid-double-digit revenue growth.
Inventory
Inventory across the business was up 5.9% at the end of the quarter, compared to the same period in 2024. Inventory for Anthropologie, specifically ended the quarter up 11% YoY. In the fourth quarter, the company expects inventory to grow along with sales as the teams focus on increasing product turns.
Pricing
The company emphasized that its brands are committed to maintaining opening price points and protecting prices. Additionally, management said most of the price increases have been made and the company is not planning many price increases next year.
Tariffs have impacted the 3Q 2025 gross margin rate by approximately 60 basis points and are estimated to impact 4Q 2025 gross margin by 75 basis points. The team is working on tariff mitigation efforts for 2026 including negotiating vendor terms, modifying countries of origin, adjusting transportation modes and strategically managing pricing. The impact of tariffs is difficult to predict beyond 4Q 2025, but the company is aiming to achieve 100 basis points of gross margin improvement for fiscal year 2026.
Consumer behavior
Management anticipates the holiday season will be highly competitive and promotional.
There has been a shift in consumers’ behavior with customers waiting longer to make purchases until promotions began. Management observed and met this shift with early holiday events and promotions.
Product
In Urban Outfitters, the business grew across all major categories, anchored in strong regular price sales, new customer growth and continued success in focused growth categories. Within women’s, the denim business continued to be strong, complemented by pants, lounge, sweaters and accessories. The men’s apparel category delivered double-digit regular price comps in the month of October.
Anthropologie delivered an 8% retail segment comparable sales increase, representing the 19th consecutive quarter of positive comparable sales for Anthropologie. Category strength remained consistent across apparel, accessories and weddings, complemented by an acceleration in sales trends within the home category. The company’s private brands are driving growth, including Maeve, Celandine, Lyrebird and Pilcro. This was highlighted by the launch of Maeve as a standalone brand, transitioning it from a private label brand to a dedicated boutique concept. The first Maeve boutique opened in Raleigh, North Carolina on October 1, 2025, and digital demand for both Maeve and Anthropologie in the trade area has outpaced brand-wide demand growth since the store opened. Building on this success, the next Maeve boutique is scheduled to open at the end of fiscal Q4 in Atlanta’s Buckhead Village District, with an additional location to be announced in the first quarter of fiscal 2027.
Nuuly Q3 revenue grew by 49%, primarily driven by an increase of over 40% in average active subscribers, reaching just shy of 400,000 average active subscribers versus the prior comparable quarter.
Wholesale
The wholesale segment delivered an 8% increase in revenue driven by growth in the specialty store accounts, which was largely fueled by healthy increases in FP Movement. Sheila Harrington, Global CEO of Urban Outfitters and Free People Groups, called it “an exciting time.”
“It’s an exciting time for wholesale because we’re seeing the brand — both Free People and FP Movement — perform extraordinarily well within our wholesale account base,” she said. “We see our specialty store business thriving as we specialize our product into the outsourced space, our studio space, and the international opportunity we have with both brands.”
