Gap (GAP) Q1 2025 Earnings
How Did GAP Stock React to Q1 2025 Earnings?
S&P 500 over the same 30 days: +5.27%.
Did GAP Beat Earnings? Q1 2025 Results
Yes. Gap reported Q1 2025 earnings of $0.51 a share on May 29, 2025, beating the $0.45 consensus estimate by 13.3%. Revenue was $3.5B.
Gap Inc. opened fiscal 2025 on solid footing, posting first-quarter results that beat Wall Street expectations on both the top and bottom lines, even as a looming tariff bill tempered investor enthusiasm. GAAP diluted EPS of $0.51 topped the $0.45 consensus by 13.33%, climbing from $0.41 a year ago, while net sales rose 2.2% to $3.46 billion, extending the company's streak to five consecutive quarters of positive comparable sales and nine straight quarters of market share gains. The outperformance was driven largely by Old Navy and the Gap brand, where comparable sales grew 3% and 5% respectively, offsetting an 8% comp decline at a struggling Athleta. Operating margin expanded 140 basis points to 7.5%, with operating income reaching $260.00 million as cost discipline kept operating expenses essentially flat despite higher revenue. The forward picture, however, is cloudier; current tariff rates could generate gross incremental costs of $250 million to $300 million, with mitigation efforts expected to offset more than half, leaving a net $100 million to $150 million drag weighted toward the back half of the year. Excluding that impact, management guided for 1% to 2% full-year sales growth and 8% to 10% underlying operating income growth.
- Positive comparable sales for 5th consecutive quarter with 2% comp growth
- 9th consecutive quarter of market share gains
- Online sales increased 6% and represented 39% of total net sales
- Gross margin expanded 60 basis points to 41.8% driven by ROD leverage
- Operating margin improved 140 basis points to 7.5%
- Operating expenses held essentially flat year-over-year despite sales increase
- Gap brand reinvigoration playbook driving 5% comp sales growth
- Old Navy continued momentum with 3% comp growth and market share gains
“Gap Inc. delivered strong first quarter results, exceeding financial expectations and gaining market share for the 9th consecutive quarter.”
Gap CEO, on the earnings call
What Was Gap's Outlook in Q1 2025?
For full-year fiscal 2025, Gap Inc. expects net sales growth of 1% to 2% and underlying operating income growth of 8% to 10% (excluding the estimated net tariff impact of $100-$150 million). Capital expenditures are expected to be approximately $600 million, net interest income approximately $15 million, effective tax rate approximately 26%, and approximately 35 net store closures. Current tariffs (30% on most China imports, 10% on most other imports) could result in gross incremental costs of $250-$300 million, with mitigation strategies expected to offset more than half. The remaining net impact of $100-$150 million to fiscal 2025 operating income is primarily weighted to the back half of the year. For Q2 fiscal 2025, net sales are expected to be approximately flat year-over-year, gross margin similar to Q1 2025, and operating expense as a percentage of net sales expected to leverage slightly year-over-year.
GAP YoY Financials
| Metric | Q1 2025 | Q1 2024 | Year over year |
|---|---|---|---|
| Revenue | $3.5B | $3.4B | +2.2% |
| Gross Profit | $1.4B | $1.4B | +3.7% |
| Operating Income | $260.0M | $205.0M | +26.8% |
| Net Income | $193.0M | $158.0M | +22.2% |
GAP Revenue by Segment
GAP Revenue by Geography
Figures from SEC filings and company reports. Not investment advice.