1. GAP's net sales increased by 2% in Q1 2025. 2. Old Navy and Gap brands showed positive comparable sales growth. 3. Operating margin improved to 7.5%, up 140 basis points. 4. Cash reserves rose 28% year-over-year, totaling $2.2 billion. 5. FY 2025 outlook expects 1-2% growth despite potential tariff impacts.
GAP reported consecutive positive sales growth and operating margin improvements, signaling better business fundamentals similar to successful recoveries seen in previous years post-recession.
The strong financial performance indicates a positive trajectory that could attract investor interest.
Immediate financial results are positive, likely influencing investor sentiment quickly, reminiscent of past earnings surprises boosting stock prices.
Net sales increased 2% versus last year with comparable sales up 2%
9th consecutive quarter of market share gains
Operating margin of 7.5% improved 140 basis points versus last year
Cash, cash equivalents and short-term investments of $2.2 billion up 28% versus last year
SAN FRANCISCO, May 29, 2025 /PRNewswire/ -- Gap Inc. (NYSE: GAP), the largest specialty apparel company in the U.S. with a portfolio of brands including Old Navy, Gap, Banana Republic, and Athleta, today reported financial results for its first quarter ended May 3, 2025.
“Gap Inc. delivered strong first quarter results, exceeding financial expectations and gaining market share for the 9th consecutive quarter,” said President and Chief Executive Officer, Richard Dickson. “We had positive comp sales for the 5th consecutive quarter, with our two largest brands, Gap and Old Navy, winning in the marketplace, demonstrating the power of our brand reinvigoration playbook. The rigor we've embedded across the organization continued to serve us well, driving gross margin and operating margin expansion in the quarter. These results are yet another proof point that our strategy is working. In this highly dynamic environment, we are optimistic yet realistic and remain focused on controlling the controllables as we build our company for long-term growth.”
Additional information regarding free cash flow, which is a non-GAAP financial measure, is provided at the end of this press release along with a reconciliation of this measure from the most directly comparable GAAP financial measure for the applicable period.
| First Quarter | 2025 | 2024 |
|---|---|---|
| Old Navy | 3 % | 3 % |
| Gap | 5 % | 3 % |
| Banana Republic | — % | 1 % |
| Athleta | (8) % | 5 % |
| Gap Inc. | 2 % | 3 % |
The below fiscal 2025 outlook does not reflect the potential effect of tariffs, which are currently 30% on most imports from China and 10% on most imports from other countries. If these tariff rates remain, they could result in a gross estimated incremental cost of approximately $250 million to $300 million. The company currently has strategies to mitigate more than half of that amount. After considering these mitigation strategies, the company estimates a remaining net impact of about $100 million to $150 million to fiscal 2025 operating income, primarily weighted to the back half of the year. There is minimal impact expected to the second quarter fiscal 2025 gross margin outlook below.
| FY 2025 Outlook | FY 2024 Results | |
|---|---|---|
| Net sales | 1% to 2% growth | $15.1 billion |
| Operating income | 8% to 10% growth | $1.1 billion |
| Net interest income | Approximately | $15 million |
| Effective tax rate | Approximately 26% | 26 % |
| Capital expenditures | Approximately | $600 million |
| Net store closures | Approximately | 35 |
Whitney Notaro, Head of Investor Relations at Gap Inc., will host a conference call to review the company's first quarter fiscal 2025 results beginning at approximately 2:00 p.m. Pacific Time today. Ms. Notaro will be joined by President and Chief Executive Officer, Richard Dickson and Chief Financial Officer, Katrina O'Connell.
A live webcast of the conference call and accompanying materials will be available online at investors.gapinc.com. A replay of the webcast will be available at the same location.
This press release and related conference call include financial measures that have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP) and are therefore referred to as non-GAAP financial measures. The non-GAAP measures described below are intended to provide investors with additional useful information about the company's financial performance, to enhance the overall understanding of its past performance and future prospects, and to allow for greater transparency with respect to important metrics used by management for financial and operating decision-making.
The company presents these non-GAAP financial measures to assist investors in seeing its financial performance from management's view and because it believes they provide an additional tool for investors to use in computing the company's core financial performance over multiple periods with other companies in its industry.
This press release and related conference call and accompanying materials contain forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-looking statements.
Gap Inc., a house of iconic brands, is the largest specialty apparel company in America. Its Old Navy, Gap, Banana Republic, and Athleta brands offer clothing, accessories, and lifestyle products for men, women and children. Since 1969, Gap Inc. has created products and experiences that shape culture, while doing right by employees, communities and the planet. Gap Inc. products are available worldwide through company-operated stores, franchise stores, and e-commerce sites. Fiscal year 2024 net sales were $15.1 billion. For more information, please visit www.gapinc.com.
Investor Relations Contact: Whitney Notaro [email protected]
Media Relations Contact: Megan Foote [email protected]