Financial Performance - Net sales for Q3 fiscal 2025 increased by $113 million, or 3%, compared to Q3 fiscal 2024[84] - Gross profit for Q3 fiscal 2025 was $1.67 billion, with a gross margin of 42.4%, down from 42.7% in Q3 fiscal 2024[84] - Operating income for Q3 fiscal 2025 was $334 million, compared to $355 million in Q3 fiscal 2024[84] - Net income for Q3 fiscal 2025 was $236 million, down from $274 million in Q3 fiscal 2024[84] - Diluted earnings per share for Q3 fiscal 2025 was $0.62, compared to $0.72 in Q3 fiscal 2024[84] Inventory and Sales Performance - Merchandise inventory as of Q3 fiscal 2025 increased by 5% compared to Q3 fiscal 2024[84] - Comparable sales for Old Navy Global increased by 6% in Q3 fiscal 2025, while Athleta Global saw a decline of 11%[91] Operating Expenses and Costs - Operating expenses for Q3 fiscal 2025 were $1.34 billion, representing 33.9% of net sales, an increase from 33.4% in Q3 fiscal 2024[100] - Cost of goods sold increased by 0.7 percentage points as a percentage of net sales in Q3 fiscal 2025, primarily due to tariff costs[99] Taxation - The effective income tax rate for Q3 fiscal 2025 was 30.0%, up from 24.1% in Q3 fiscal 2024[84] - Income tax expense for the third quarter of fiscal 2025 was $101 million, compared to $87 million in the same period of fiscal 2024, reflecting an effective tax rate increase from 24.1% to 30.0%[104] - The effective tax rate for the first three quarters of fiscal 2025 was 28.0%, up from 26.2% in the same period of fiscal 2024[105] Cash Flow and Liquidity - Net cash provided by operating activities decreased by $263 million in the first three quarters of fiscal 2025, totaling $607 million compared to $870 million in the same period of fiscal 2024[110] - Free cash flow for the first three quarters of fiscal 2025 was $280 million, down from $540 million in the same period of fiscal 2024[115] - Net cash used for financing activities increased by $165 million in the first three quarters of fiscal 2025, primarily due to $152 million in common stock repurchases[111] - As of November 1, 2025, the company had cash and cash equivalents of $2.26 billion and short-term investments of $255 million[107] - There were no borrowings under the ABL Facility as of November 1, 2025, indicating strong liquidity management[107] Dividends and Investments - The company paid a dividend of $0.165 per share during the third quarter of fiscal 2025 and authorized the same amount for the fourth quarter[116] - Net cash used for investing activities decreased by $249 million in the first three quarters of fiscal 2025, primarily due to $246 million fewer net purchases of short-term investments[110] Economic Factors - The company continues to monitor macroeconomic factors that may impact cash flows, including geopolitical instability and inflationary pressures[108]
The Gap, Inc.(GAP) - 2026 Q3 - Quarterly Report