Gap Inc. has completed the second full year of its turnaround programme with sales still moving in the right direction, even as profitability came under strain from tariff-related pressure. The US retail group said fiscal 2025 revenue reached $15.366bn for the year ended 31 January, a 1.85% increase on 2024 and a 3% gain on a comparable basis—marking a second consecutive year of top-line growth after the declines seen in 2023.
The performance lands at a pivotal moment in the Gap transformation plan, the restructuring and relaunch effort being driven by chief executive Richard Dickson, who took the helm in July 2023. While the company sustained momentum in sales, it said changes in US tariff policy weighed on margins and limited earnings progress.
For the full year, gross profit and operating profit were essentially unchanged at $6.268bn and $1.115bn, respectively. Net income, however, slipped 3.31% to $816m.
Margins moved lower. Gap reported a gross margin of 40.8% in fiscal 2025, down 50 basis points year on year. The company attributed much of the deterioration to tariffs, explaining: “Merchandise margin decreased 80 basis points from last year, mainly due to an estimated net tariff impact of approximately 120 basis points,“ it said. Gap ended the year with about 3,500 stores in 35 countries, including 2,474 company-operated locations.
Brand performance was mixed, highlighting where the Gap transformation plan is gaining traction and where challenges remain. The Gap brand—an early focus of the programme’s first phase—posted a 5% sales increase to $3.5bn, rising 6% on a comparable basis. Management said the label is expanding its reach, noting that “Gap is demonstrating the momentum it is gaining as it continues to broaden its customer base across all generations,“ the group added.
Old Navy also delivered growth, with sales up 3% to $8.7bn, matching that pace on a comparable basis. However, the group’s other major banners moved in the opposite direction. Banana Republic revenue edged down 1% to $1.9bn, while Athleta posted the sharpest decline, falling 10% to $1.2bn.
Looking to fiscal 2026, Gap is guiding to another year of modest expansion, projecting revenue of roughly $15.4bn—implying growth of around 2% to 3%. The company also expects gross margin to be flat to slightly higher, signalling an intent to stabilise profitability even as tariff headwinds remain a consideration