Gap Reports Flat Net Sales in Q2 2025, Expects 1-2% Growth for FY25

Gap reported Q2 FY25 net sales of $3.7bn, flat YoY, with 1% comparable sales growth and 1% decrease in store sales. Online sales increased 3%, accounting for 34% of total net sales. The company expects FY25 net sales to grow 1-2% and operating margin to remain between 6.7-7%.

Gap Inc. (NYSE: GAP) reported its second-quarter fiscal year 2025 (FY25) results, with net sales of $3.7 billion, flat year-over-year (YoY), and a 1% comparable sales growth. The company also saw a 1% decrease in store sales. Online sales increased by 3%, now accounting for 34% of total net sales. Gap Inc. expects FY25 net sales to grow by 1-2% and its operating margin to remain between 6.7% and 7%.

Brand Performance:
- Old Navy reported a 1% net sales growth to $2.2 billion and a comparable sales increase of 2%.
- Gap brand posted net sales of $772 million with comparable sales growth of 4%.
- Banana Republic saw net sales of $475 million but Athleta posted an 11% decline in net sales and a comparable sales drop of 9%.

Financial Highlights:
- Cash, cash equivalents, and short-term investments rose 13% YoY to $2.4 billion.
- The company's operating margin was 7.8%.
- Gross margin contracted by 140 basis points to 41.2%, primarily due to lapping benefits from a credit card revenue-sharing agreement in the previous year.

Outlook:
- Gap Inc. reaffirmed its fiscal 2025 outlook, projecting 1-2% net sales growth with an operating margin between 6.7% and 7.0%, including estimated tariff impacts.
- The company forecasts its capital expenditures to remain between $500 million and $550 million and the net closures of 35 stores.

References:
[1] https://www.nasdaq.com/articles/gap-inc-q2-income-rises-beats-estimates
[2] https://www.stocktitan.net/news/GAP/gap-inc-reports-second-quarter-fiscal-2025-lhrbg8exsek0.html
[3] https://finance.yahoo.com/news/gap-nyse-gap-reports-q2-203432131.html