Gap posts flat net sales in second quarter 2025
US apparel retailer Gap reported net sales of $3.7bn for the second quarter (Q2) of fiscal 2025 (FY25) – flat compared to the same period of the previous year.
The company saw an increase in comparable sales of 1% year-on-year (YoY) and a 1% decrease in store sales.
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Gap maintained 3,500 store locations across over 35 countries, including 2,486 company-operated stores.
Online sales showed a positive trajectory, increasing 3% and accounting for 34% of total net sales.
Gap president and CEO Richard Dickson stated: “In the second quarter, Gap overdelivered on profit expectations and achieved our topline goals. With positive comps for the sixth consecutive quarter, fuelled by our three largest brands Old Navy, Gap and Banana Republic, it’s clear our strategy is working.”
Old Navy reported 1% Q2 net sales growth to $2.2bn and a comparable sales increase of 2%.
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By GlobalDataGap posted net sales of $772m and comparable sales growth of 4%.
Banana Republic saw net sales of $475m but Athleta posted an 11% decline in net sales and a comparable sales drop of 9%.
The company’s gross margin fell by 140 basis points to 41.2%, primarily due to a decrease in merchandise margin by 150 basis points. This was attributed to the comparison with Q2 FY24, which benefited from additional sales linked to the company’s revenue-sharing agreement with its credit card partner.
Operating expenses stood at $1.2bn and an operating income of $292m with an operating margin of 7.8%.
Net income reached $216m, and diluted earnings per share were $0.57.
Gap’s FY25 outlook, including the third quarter, considers the estimated impact of tariffs based on trade policies effective from 7 August.
Net sales for full year are expected to grow between 1% and 2%, with a net interest income of $15m.
Operating margin has been revised and is expected to remain between 6.7% and 7%.
The company forecasts its capital expenditures to remain between $500m and $550m and the net closures of 35 stores.
Dickson added: “Two years ago, I shared my vision for leading Gap into an exciting new chapter. Since then, we’ve built a stronger foundation with more relevant brands, a sharper operating platform and a more unified culture while consistently demonstrating agility and resilience in dynamic environments. We are advancing our transformation with discipline, clarity and momentum and remain committed to building a high-performing company that delivers sustainable, long-term value for our shareholders.”
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