Core Insights - The Gap, Inc. reported second-quarter fiscal 2025 results with earnings surpassing estimates while revenues slightly missed expectations and remained flat year over year [1][3]. Financial Performance - Earnings per share for the second quarter were 57 cents, exceeding the Zacks Consensus Estimate of 55 cents and increasing by 5.6% from the previous year [3][10]. - Net sales totaled $3.73 billion, slightly below the consensus estimate of $3.74 billion, with comparable sales rising 1% year over year [4][10]. - Online sales increased by 3% year over year, making up 34% of total sales, while store sales declined by 1% [4][10]. Brand Performance - Old Navy's net sales rose 1% year over year to $2.2 billion, with comparable sales increasing by 2%, marking ten consecutive quarters of market share gains [8]. - Gap Global saw net sales increase by 1% year over year to $772 million, with comparable sales up 4% [9]. - Banana Republic's net sales decreased by 1% year over year to $475 million, while comparable sales rose by 4% [11]. - Athleta experienced a significant decline, with net sales dropping 11% year over year to $300 million and comparable sales down 9% [11]. Margins and Costs - The gross margin improved to 41.2%, up 140 basis points year over year, while the operating margin was 7.8%, down 10 basis points from the previous year [12][13]. - Operating expenses were reduced by 3.6% year over year, totaling $1.2 billion [13]. Financial Health - The company ended the quarter with cash and cash equivalents of $2.4 billion, a 13% increase from the previous year [14]. - Merchandise inventory rose by 9% year over year to $2.3 billion [14]. - Net cash from operating activities was reported at $308 million, with free cash flow of $127 million [15]. Future Outlook - For fiscal 2025, the company projects sales growth of 1-2% from the previous year's $15.1 billion, driven by Old Navy, Gap, and Banana Republic, while Athleta is expected to recover gradually [18]. - Management anticipates a gross margin decline of approximately 70 to 90 basis points year over year, primarily due to tariff impacts [19]. - Operating income is expected to rise by 6-7% from the prior year's $1.11 billion, excluding tariff impacts [20].