Gap Inc. revealed that its net sales remained flat at $3.73 billion for the second quarter of fiscal year 2025 (Q2 FY25), anticipating a decline in margins due to tariffs. The company noted a modest year-over-year increase of 1% in comparable sales. These figures reflect the Gap Inc. Q2 FY25 performance impact attributed largely to the current tariff landscape.
Old Navy, a significant segment of Gap’s brand portfolio, reported second-quarter sales of $2.2 billion, representing a 1% rise compared to the same quarter last year. The Gap brand itself achieved net sales of $772 million, up by 1%, while comparable sales surged by 4%, marking the seventh consecutive quarter of positive growth.
Conversely, Banana Republic’s performance showed a slight downturn, with its net sales declining to $475 million, a 1% drop from the prior year. However, comparable sales in this sector increased by 4%. Meanwhile, Athleta experienced a notable drop in performance, with net sales plummeting 11% to $300 million, accompanied by a 9% decrease in comparable sales.
Overall, physical store sales across Gap’s brands fell by 1%, while online sales rose by 3%, accounting for 34% of total net sales.
CEO Richard Dickson stated, “In the second quarter, Gap overdelivered on profit expectations and achieved our topline goals. With positive comps for the sixth consecutive quarter, fueled by our three largest brands, it’s clear our strategy is working.”
For Q2 FY25, Gap Inc.’s operating income was $292 million, with an operating margin of 7.8%, and net income reached $216 million, translating to diluted earnings per share of $0.57. Maintaining its fiscal FY25 outlook, the company anticipates net sales growth between 1% and 2%, while adjusting operating margin expectations to 6.7%–7%, reflecting an estimated tariff impact of around $150 million to $175 million. Looking ahead, the Gap Inc. Q2 FY25 performance impact continues to influence projections for Q3 FY25, with net sales growth expected between 1.5% and 2.5%, despite anticipating a reduction in gross margin due to tariffs.
