How did Gap's revenue and expenses shift in Q4 2025 compared to previous quarters?

Gap's revenue and expenses in Q4 2025 showed a notable shift compared to previous quarters, reflecting both challenges and strategic successes:

1. Revenue Shift:
   • In Q4 2024, Gap Inc.'s net sales decreased by 3% year-over-year, amounting to $4.15 billion. This decline was influenced by a 7 percentage point negative impact due to the loss of an additional week in fiscal 2023.
   • Despite the revenue decline, the company reported a 3% increase in comparable sales, indicating a positive trend in consumer engagement.
2. Expense Shift:
   • Gap Inc.'s gross margin remained flat at 38.9% in Q4 2024, with a slight increase in merchandise margin offset by higher rent, occupancy, and depreciation costs.
   • The company's operating margin improved by 120 basis points year-over-year, reaching 6.2% in Q4 2024, reflecting enhanced operational efficiency and cost management.
3. Financial Performance:
   • Gap Inc. reported earnings per share (EPS) of $0.54 for Q4 2024, surpassing analyst estimates of $0.36. This beat was partly due to effective cost management and strategic growth initiatives.
   • The company generated $1 billion in free cash flow for the fiscal year 2024, highlighting robust cash management and liquidity.
4. Strategic Insights:
   • Gap Inc. closed approximately 35 net stores in fiscal 2025, part of a broader strategy to streamline operations and focus on profitability.
   • The company's full-year net sales increased by 1% compared to the previous year, with comparable sales rising 3% for the entire year 2024.

In conclusion, Gap Inc. in Q4 2025 faced a decline in revenue due to calendar shifts and lost weeks, yet the company showed resilience with improved operational margins and a notable beat in EPS. The firm's strategic store closures and brand reinvigoration efforts are indicative of a focused approach to optimize profitability and market share.