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Gap Inc. Reports Second Quarter Fiscal 2025 Results

On August 28, 2025, Gap Inc. (NYSE: GAP), the largest specialty apparel company in the U.S., released its financial results for the second quarter ending August 2, 2025. The company showcased a solid performance with net sales remaining steady at $3.7 billion, similar to the previous year. Importantly, for the sixth consecutive quarter, comparable sales increased by 1%, primarily driven by its three largest brands: Old Navy, Gap, and Banana Republic.

President and CEO Richard Dickson emphasized the company’s strategic progress, stating, "We overdelivered on profit expectations and achieved our topline goals. This underscores that our strategic initiatives are indeed working. Since I introduced my vision for the future of Gap Inc. two years ago, we’ve made considerable strides in fortifying our foundation, enhancing brand relevance, and fostering a unified company culture."

Financial Overview

In terms of store operations, Gap Inc. closed the second quarter with approximately 3,500 stores in over 35 countries, with around 2,486 stores under company operations. Notably, while store sales dipped by 1% year-over-year, online sales saw a modest gain of 3%, constituting 34% of total net sales.

Key Financial Highlights:

• - Gross Margin: Recorded at 41.2%, a decrease of 140 basis points compared to last year.
• - Operating Income: Stood at $292 million, with an operating margin of 7.8%.
• - Net Income: The company posted a net income of $216 million, translating to a diluted earnings per share of $0.57, which is a 6% increase compared to the previous year.

Balance Sheet Insights

The company ended the quarter with cash and cash equivalents of $2.4 billion, representing a 13% increase from the previous year. Significant cash flow was also generated through operating activities, with $308 million, leading to a free cash flow of $127 million after accounting for capital expenditures of $181 million.

Brand Performance

The individual brands under Gap Inc. displayed diverse performances:

• - Old Navy: Reported net sales of $2.2 billion, up 1% with comparable sales rising by 2%.
• - Gap: Achieved sales of $772 million, a 1% increase, and a 4% rise in comparable sales for the seventh straight quarter.
• - Banana Republic: Saw slight difficulties with a 1% drop in sales, but comparable sales rose by 4% as brand revitalization began to resonate with consumers.
• - Athleta: Struggled, reporting a 11% decline in sales and a 9% dip in comparable sales as it works on long-term brand adjustments.

Future Prospects

Looking ahead, Gap Inc. reaffirmed its outlook for fiscal 2025, projecting a net sales growth of 1% to 2% and an operating margin of 6.7% to 7.0%, which considers the anticipated effects of tariffs. This includes a forecast of 1.5%-2.5% growth in net sales for the third fiscal quarter. Dickson expressed optimism stating, "We remain committed to creating sustainable value for our shareholders while advancing our strategic initiatives, including improving technology for better customer engagement and enhancing our operational efficiency."

With a focused strategy and agile execution, Gap Inc. continues to navigate the evolving retail landscape, demonstrating adaptability in its operations and foresight in strategic planning.

For additional information and a detailed breakdown of financial results, the company is hosting a conference call with stakeholders, led by CFO Katrina O’Connell and President Dickson.

To follow Gap Inc.'s performance and insights, stay updated through their investor relations website: gapinc.com.