The company experienced a modest increase in comparable sales, which rose by 1% year-over-year.
Old Navy, a key contributor to Gap’s portfolio, saw its second-quarter sales reach $2.2bn, marking a 1% increase from the previous year.
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The Gap brand itself also witnessed a rise in net sales to $772m, up by 1%, with comparable sales climbing by 4%. This marks the seventh consecutive quarter of positive comparable sales for the brand.
Banana Republic’s performance slightly diverged from its sister brands, with net sales dipping to $475m, a 1% decrease from last year. However, comparable sales for Banana Republic were up by 4%.
Athleta net sales fell 11% to $300m and comparable sales dropped 9%.
Physical store sales across the company’s brands declined by 1%.
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By GlobalDataIn contrast, online sales exhibited growth, increasing by 3% compared to the previous year and accounting for 34% of total net sales.
Gap Inc president and CEO Richard Dickson said: “In the second quarter, Gap overdelivered on profit expectations and achieved our topline goals. With positive comps for the sixth consecutive quarter, fuelled by our three largest brands Old Navy, Gap and Banana Republic, it’s clear our strategy is working.
“Two years ago, I shared my vision for leading Gap Inc. into an exciting new chapter. Since then, we’ve built a stronger foundation with more relevant brands, a sharper operating platform, and a more unified culture while consistently demonstrating agility and resilience in dynamic environments. We are advancing our transformation with discipline, clarity, and momentum and remain committed to building a high-performing company that delivers sustainable, long-term value for our shareholders.”
Overall performance in Q2 FY25
Gap Inc’s operating income for Q2 FY25 was reported at $292m, with operating margin at 7.8%.
Net income for Gap Inc was recorded at $216m for Q2 FY25, translating into diluted earnings per share of $0.57.
FY25 Outlook
Gap Inc maintains its fiscal FY25 outlook with net sales expected to grow by 1% to 2%.
The company has adjusted its operating margin expectations to between 6.7% and 7%, “which includes an estimated net impact of approximately $150m to $175m or approximately 100 to 110 basis points to operating margin”.
Gross margin is anticipated to face headwinds with a forecasted deleverage of about 70 to 90 basis points year over year due to tariffs.
Gap is also optimistic about Q3 FY25 performance and projects net sales growth between 1.5% and 2.5%.
However, gross margin for the third quarter is expected to “deleverage by approximately 150 to 170 basis points year over year” due to an estimated net tariff impact of around 200 basis points.
