How did GAP's Q4 2025 earnings surprise investors?

Gap Inc. (GAP) delivered Q4 2025 earnings that significantly surpassed investor expectations, as reflected in several key metrics: 1. **Earnings Per Share (EPS)**: - GAP reported an EPS of $0.54 for Q4 2025. - This exceeded the estimated EPS of $0.38 to $0.56, depending on the source, indicating a substantial beat on earnings expectations. 2. **Revenue**: - The company's revenue for the quarter was $4.15 billion. - This fell slightly below the estimated revenue of $4.06 billion to $4.15 billion, but it still surpassed analysts’ expectations, especially considering the 3% year-over-year decline due to calendar shifts and the loss of an additional week. 3. **Operational Improvements**: - GAP achieved an operating margin of 6.2%, up from 5% in the previous year. - The gross margin expanded by 250 basis points to 41.3%, reflecting improved operational efficiency and cost management. 4. **Market Response**: - Following the earnings release, GAP's stock surged by 18%, 12.4%, or 13%, in after-hours trading or Thursday trading, respectively, indicating investor enthusiasm about the company's performance. - The positive results led to renewed investor confidence, with the stock price approaching its 52-week high. In summary, GAP's Q4 2025 earnings exceeded expectations across various financial metrics, including EPS and revenue. The company's strategic focus on operational improvements and market share expansion, despite facing challenges in certain brands, contributed to these outstanding results. The market's positive response reflects investor recognition of GAP's successful performance and growth potential.