The Gap Inc (GAP) Q4 2025 earnings summary

Executive summary

• FY 2024 net sales reached $15.1 billion, up 1% year-over-year, with comparable sales up 3% and all four brands posting flat to positive comps and gaining market share for the eighth consecutive quarter.

• Operating income grew over 80% to $1.1 billion, with operating margin at 7.4% and EPS at $2.20, the highest since 2018.

• Generated $1.5 billion in operating cash flow and ended the year with $2.6 billion in cash and short-term investments, up 38% year-over-year.

• Achieved one of the highest gross margins in 20 years and positive comps in all four quarters.

• Focused on brand reinvigoration, operational efficiency, and leveraging technology and AI for future growth.

Financial highlights

• Q4 comparable sales up 3% overall; Old Navy and Gap both up 3% and 7% respectively, Banana Republic up 4%, Athleta down 2%.

• Q4 EPS of $0.54, up 10% year-over-year; full-year EPS of $2.20, up 64% from last year.

• Full-year net sales of $15.1 billion, up 1% year-over-year; gross margin expanded 250 basis points to 41.3%.

• Operating income of $1.1 billion, up 83% from prior year’s adjusted figure; operating margin at 7.4%, highest since 2018.

• Ended year with $2.6 billion in cash and $1 billion in free cash flow.

Outlook and guidance

• Fiscal 2025 net sales expected to grow 1%-2% year-over-year, with slight gross margin expansion and SG&A leverage.

• Operating income growth projected at 8%-10% for 2025, despite a 2 percentage point FX headwind.

• Capital expenditures planned at $600 million, up 34% to support organic growth; ~35 net store closures expected, mainly at Banana Republic.

• Q1 2025 net sales expected to be flat to up slightly; gross margin and opex to leverage slightly year-over-year.