Gap Inc. Reports Fourth Quarter and Fiscal 2025 Results; Provides Fiscal 2026 Outlook

Core Insights - Gap Inc. reported a successful fourth quarter and fiscal year 2025, achieving a 2% increase in net sales to $15.4 billion and a 3% rise in comparable sales, marking the eighth consecutive quarter of positive comparable sales [1][2] - The company generated $1.1 billion in operating income with an operating margin of 7.3%, exceeding expectations, and announced a new $1 billion share repurchase authorization [1][2] - Gap Inc. aims to continue its transformation by focusing on core apparel growth and exploring new growth accelerators [1] Fourth Quarter Fiscal 2025 - Financial Results - Net sales reached $4.2 billion, up 2% year-over-year, with comparable sales increasing by 3% [1] - Online sales accounted for 42% of total net sales, while store sales remained flat [1] - Gross margin was 38.1%, a decline of 80 basis points from the previous year, primarily due to tariff impacts [1] Full Year Fiscal 2025 - Financial Results - Total net sales for the year were $15.4 billion, a 2% increase, with comparable sales also up 3% [1] - Online sales represented 39% of total net sales, increasing by 4% year-over-year [1] - The company ended the year with nearly 3,500 store locations across 35 countries [1] Balance Sheet and Cash Flow Highlights - Gap Inc. paid a fourth quarter dividend of $0.165 per share, totaling $62 million, and announced a first quarter fiscal year 2026 dividend of $0.175 per share, a 6% increase [1] - The company repurchased 7 million shares for $155 million during fiscal year 2025 [1] - Free cash flow for the year was $823 million, down from $1.039 billion the previous year [5] Global Brand Results - Old Navy's full year net sales were $8.7 billion, up 3%, with comparable sales also increasing by 3% [1] - Gap's full year net sales reached $3.5 billion, a 5% increase, with comparable sales up 6% [1] - Athleta's full year net sales declined by 10%, with comparable sales down 9% [1] Fiscal 2026 Outlook - The company expects net sales to grow by 2% to 3% year-over-year, with gross margin remaining flat to slightly up [2] - Adjusted diluted earnings per share for fiscal 2026 is projected to be approximately $2.20 to $2.35 [2] - The first quarter outlook anticipates net sales growth of 1% to 2% year-over-year, with gross margin expected to decline by 150 to 200 basis points [2]