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S&P Global Ratings upgraded Gap Inc.'s issuer credit rating to 'BB+' from 'BB', citing improved comparable sales and operating margins in 2025. The upgrade reflects a forecasted adjusted EBITDA margin of 17.2% in 2026, up from 17.1% in 2025, despite ongoing tariff impacts.

Gap's overall revenue is expected to rise by 2.1% in 2026, driven primarily by the Gap and Old Navy brands, while Banana Republic and Athleta face challenges. The company reported a 3% revenue growth in Q3 2025, with comparable sales up 5%, led by strong performances from Old Navy and Gap.

Gap's adjusted leverage is projected to increase to 1.6x in 2026, with a cash balance of $2.5 billion as of November 1, 2025. Overall, the stable outlook indicates expectations for sustained improved performance and brand momentum.