Gap Inc. Posts Higher Q2 Profit on Rising Comparable Sales

Gap Inc. reported stable financial results for the second quarter of fiscal 2025, with net sales of $3.7 billion flat year-over-year and a 1% increase in comparable sales, marking the sixth consecutive quarter of positive comps driven by its three largest brands: Old Navy, Gap, and Banana Republic. The company posted a net income of $216 million, or $0.57 per share, exceeding analyst expectations, while operating income remained steady at $292 million. Despite these gains, shares fell 2.8%, influenced in part by the anticipated $150 to $175 million tariff impact on operating income in 2025, though no tariff annualization is expected in 2026. Gap's third-quarter revenue is projected to reach $3.91 billion, aligning with market estimates, supported by a solid balance sheet with $2.4 billion in cash and a current ratio above industry median, though the company faces challenges such as a slight decline in free cash flow margin and ongoing struggles in its Athleta segment. The company continues to focus on strategic adjustments, including sourcing and pricing optimization, to sustain growth amid a competitive retail environment. Overall, Gap Inc.'s consistent performance and strategic initiatives indicate progress toward stabilizing and growing its business.