The company reported earnings of 25 cents a share, down from 37 cents in the year-earlier quarter. Revenue was flat at $3.99 billion versus $4 billion.
Analysts surveyed by FactSet were expecting the company to report third-quarter earnings of 27 cents a share on revenue of $3.82 billion.
The San Francisco company reported a 61% increase in online sales, offset by a 20% decline in store sales.
“Our third quarter results reflect our Power Plan 2023 in action — specifically the strength of our online business, which comprised 40% of sales, and our commitment to meeting the shopping preferences of our customers through our leading omni platform,” Chief Executive Sonia Syngal said in a statement.
Gap shares at last check fell 9.6% to $24.30. Gap closed Tuesday's regular session up 3.1% at $26.87.
Separately, Gap announced new C-suite hires with Asheesh Saksena joining as chief growth officer and Sandra Stangl president and CEO of the Banana Republic brand.
Saksena most recently served as president of Best Buy Health (BBY) - Get Report while Stangl spent 23 years at fellow retailer Williams Sonoma. (WSM) - Get Report
On Monday, analysts at J.P. Morgan upgraded Gap to overweight from neutral while also raising their price target to $30 a share from $22.
"Looking forward, we see an embedded call option on Gap/Banana Republic with zero value attributed to the two brands today," analyst Matthew Boss said.