Gap(GPS) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales for Q1 fiscal 2025 increased by $75 million, or 2$1.45 billion, with a gross margin of 41.8%, up from $1.40 billion and 41.2$260 million, compared to $205 million in Q1 fiscal 2024 [81]. - Net income for Q1 fiscal 2025 was$193 million, an increase from $158 million in Q1 fiscal 2024, with diluted earnings per share at$0.51 compared to $0.41 [81]. Inventory and Expenses - Merchandise inventory as of Q1 fiscal 2025 increased by 7$1.19 billion, representing 34.3% of net sales, down from 35.2% in Q1 fiscal 2024 [94]. Tax and Cash Flow - The effective income tax rate for Q1 fiscal 2025 was 26.6%, up from 24.0% in Q1 fiscal 2024 [98]. - Net cash used for operating activities was $140 million in Q1 fiscal 2025, compared to$30 million of net cash provided in Q1 fiscal 2024 [102]. - Free cash flow for the 13 weeks ended May 3, 2025, was $(223) million, compared to$(63) million for the same period in 2024 [107]. Financing Activities - Net cash used for financing activities increased by $76 million in Q1 fiscal 2025, primarily due to$70 million in common stock repurchases [103]. - The company paid a dividend of $0.165 per share in the first quarter of fiscal 2025 and authorized the same amount for the second quarter [108]. Capital Expenditures - Purchases of property and equipment amounted to$(83) million for the 13 weeks ended May 3, 2025, compared to $(93) million in 2024 [107]. Other Considerations - There have been no material changes to contractual obligations and commercial commitments since the last annual report [110]. - No significant changes to critical accounting policies and estimates have occurred since the last annual report [111]. - The market risk profile as of February 1, 2025, has not significantly changed [112].