Key Takeaways Gap's push to revive its namesake brand is showing strong results and gaining positive response. The flagship brand blends seasonal trends with essential core wardrobe pieces. This mix helps the Gap brand serve as a stable foundation within the company's brand portfolio.The Gap, Inc. (GAP) remains committed to shaping culture and instilling confidence through its high-performing group of iconic American brands, including Old Navy, Gap, Banana Republic and Athleta. Gap, the company’s namesake ...

Financial Data and Key Metrics Changes - Gap Inc. reported a 2% increase in net sales year over year, reaching $3.5 billion, with comparable sales also up 2% [36][38] - Earnings per share (EPS) grew by 24% to $0.51 compared to the previous year [11][35] - Gross margin improved by 60 basis points to 41.8%, while operating margin increased by 140 basis points to 7.5% [39][35] Business Line Data and Key Metrics Changes - Old Navy's net sales rose by 3% to $2 billion, with comparable sales also up 3%, marking its ninth consecutive quarter of market share gains [37][10] - Gap brand saw a 5% increase in net sales to $724 million, achieving a 5% increase in comparable sales, continuing its positive trend for six consecutive quarters [37][18] - Banana Republic's net sales decreased by 3% to $428 million, with comparable sales remaining flat [38][22] - Athleta's net sales fell by 6% to $308 million, with comparable sales down 8% [38][25] Market Data and Key Metrics Changes - Gap Inc. maintained its position as the number one apparel e-commerce business in the US, reflecting increased e-commerce penetration [6] - Old Navy gained market share across all income cohorts, while Gap gained share in the top and middle cohorts [5][10] Company Strategy and Development Direction - The company is focused on brand reinvigoration, with strategic priorities including financial and operational rigor, driving relevance and revenue, and strengthening the platform [9][26] - Plans to diversify sourcing to mitigate tariff impacts, with a goal for no single country to account for more than 25% of sourcing by 2026 [7][8] - Continued investment in technology and innovation to enhance customer experience and operational efficiency [27][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to navigate a dynamic environment, citing a strong financial foundation and disciplined operations [9][30] - The company reaffirmed its fiscal 2025 outlook, expecting net sales growth of 1% to 2% and operating income growth of 8% to 10%, excluding tariff impacts [36][43] - Management acknowledged potential headwinds from tariffs, estimating a net impact of $100 million to $150 million on operating income for fiscal 2025 [46][47] Other Important Information - The company returned approximately $131 million to shareholders in Q1 through dividends and share repurchases [35][41] - The company ended the quarter with a strong cash balance of approximately $2.2 billion, reflecting effective expense management [35][40] Q&A Session Summary Question: Inquiry about tariff mitigation strategies - Management confirmed that strategies are in place to mitigate over half of the anticipated tariff impact, with ongoing efforts to diversify sourcing [55][56] Question: Discussion on Gap brand's pricing strategy - Management emphasized maintaining the overall value proposition for consumers and does not expect meaningful price impacts at this time [70][71] Question: Inquiry about Banana Republic and Athleta's performance - Management highlighted ongoing progress in Banana Republic and the need for further work in Athleta to improve product appeal and marketing effectiveness [96][97]

Financial Data and Key Metrics Changes - Comparable sales increased by 2% in Q1 2025, with Old Navy's comps up 3% and Gap's comps up 5% [9][36] - Earnings per share (EPS) rose to $0.51, a 24% increase compared to the previous year [10][39] - Operating margin improved by 140 basis points to 7.5% [33][38] - Gross margin expanded by 60 basis points to 41.8% [33][38] - Cash balance at the end of the quarter was approximately $2,200,000,000, reflecting a 28% increase year over year [34][39] Business Line Data and Key Metrics Changes - Old Navy's net sales were $2,000,000,000, up 3% year over year, with consistent performance in active and denim categories [36] - Gap's net sales reached $724,000,000, also up 5% year over year, marking its sixth consecutive quarter of positive comps [36] - Banana Republic's net sales decreased by 3% to $428,000,000, with comparable sales flat [37] - Athleta's net sales fell by 6% to $308,000,000, with comparable sales down 8% [37] Market Data and Key Metrics Changes - Gap Inc. ranked as the number one apparel e-commerce business in the U.S., with e-commerce penetration increasing year over year [5] - Old Navy gained market share in both top and bottom income cohorts, while Gap gained share in top and middle cohorts [4] Company Strategy and Development Direction - The company is focused on brand reinvigoration, with clear strategic priorities aimed at long-term growth [5][8] - Plans to diversify sourcing to mitigate tariff impacts, with China expected to account for less than 3% of sourcing by the end of 2025 [6][7] - Investments in technology and supply chain improvements are prioritized to enhance operational efficiency and customer experience [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about navigating a dynamic environment while maintaining a strong financial foundation [8][29] - The company reaffirmed its fiscal 2025 outlook, expecting net sales growth of 1% to 2% and operating income growth of 8% to 10%, excluding tariff impacts [35][41] - Management acknowledged potential headwinds from tariffs but emphasized ongoing efforts to mitigate these impacts [32][46] Other Important Information - The company returned approximately $131,000,000 to shareholders in Q1 through dividends and share repurchases [33][39] - Capital expenditures for the quarter were $83,000,000, with a full-year expectation of $600,000,000 [39][47] Q&A Session Summary Question: Inquiry about tariff mitigation strategies - Management confirmed strategies are in place to mitigate over half of the anticipated tariff impact, with ongoing diversification of sourcing [51][53] Question: Discussion on Gap brand's full-price selling and customer acquisition - Management highlighted successful campaigns and collaborations driving full-price sell-through and attracting new customers across generations [62][64] Question: Inquiry about Banana Republic and Athleta's performance - Management noted Banana Republic's flat comp and ongoing progress, while emphasizing the need for further work on Athleta to improve product appeal [96][97]

FIRST QUARTER RESULTS Q1 Fiscal 2025 MAY 29, 2025 Forward Looking Statements / Non-GAAP Financial Measures FORWARD LOOKING STATEMENTS These materials and related earnings press release and conference call contain forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Forward-looking statements include statements identified as such in our May 29, 2025, ea ...

Financial Data and Key Metrics Changes - Fiscal year 2024 marked the second consecutive year and eighth consecutive quarter of market share gains for the company, with a decrease in operating expenses and the highest diluted earnings per share since 2018 [20] - The company ended the year with an increase in cash, cash equivalents, and short-term investments compared to fiscal year 2023 [20] Business Line Data and Key Metrics Changes - Old Navy, the largest brand, achieved a 3% sales comp for the year, becoming the number one specialty apparel brand and retailer in the US [21] - Gap brand regained market share in all four quarters of fiscal year 2024, reestablishing its presence in cultural conversations [22] - Banana Republic made progress in the premium lifestyle space, while Athleta stabilized revenue and maintained its position in women's active [23] Market Data and Key Metrics Changes - The company reported significant market share gains across its brands, particularly in the competitive landscape of specialty apparel [20][21][22] Company Strategy and Development Direction - The company is focused on four strategic pillars: operational and financial rigor, brand reinvigoration, strengthening its platform, and energizing its culture [5][20] - A new chief technology officer has been hired to enhance capabilities in e-commerce, data, and AI, integrating AI-driven analytics into various business functions [24] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the dynamic environment and emphasized the need for continued focus on executing strategic priorities to create shareholder value [26] - The company aims to navigate uncertain times while building on its strengths and maintaining operational excellence [26] Other Important Information - The board has undergone refreshment with the addition of new directors to align with the evolving needs of the business [6][7] - The company has established a marketing shared services function to improve advertising spend returns and brand relevance [24] Q&A Session Summary Question: Are there any questions? - No questions were submitted during the Q&A session [27]