The success story: Gap’s viral campaign featuring Katseye helped the retailer regain its fashion credibility and drive shoppers to stores.

• The campaign delivered “significant traffic and double-digit growth in denim,” Gap CEO Richard Dickson said on the company’s Q3 earnings call.
• In total, the ad generated 8 billion media impressions and 500 million views, making it one of the brand’s most successful campaigns of all time.

Zoom out: The ad helped Gap post one of its best quarters for comparable sales growth since 2017.

• Q3 comparable sales rose 5% YoY, outpacing expectations for a 3.1% increase, with healthy growth for most of the parent company’s properties. The Gap brand led with a gain of 7%, followed by Old Navy at 6% and Banana Republic at 4%.
• Athleta was the only brand to report a drop, with like-for-like sales falling 11%. The label is in the midst of a “reset year,” trying to find its footing amid the competitive athleisure space, with recovery likely to take some time.

The strategy: The Katseye campaign’s success is a clear indication that Gap Inc.’s playbook is working.

• By delivering a combination of on-trend products and culturally relevant marketing, Gap is attracting more Gen Z shoppers while keeping its existing customer base engaged.
• That same strategy is working at Banana Republic and Old Navy, with the latter in particular making strides as its value proposition resonates with shoppers across income levels.

Overall, Gap is in a healthy place: The company has been less dependent on discounting despite the macro pressures on consumers, and the holiday season is off to a “great start,” Dickson told CNBC.

The lesson for retailers: Value for shoppers means more than just offering the lowest prices. Retailers should follow Gap’s example and focus first on delivering on-trend, exciting products before going all-in on splashy marketing campaigns.

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