Gap Inc., the largest specialty apparel company in the U.S., operates a portfolio that includes well-known brands like Old Navy, Gap, Banana Republic, and Athleta. For the first quarter of fiscal 2025, the company reported a stable performance with net sales reaching $3.5 billion, representing a 2% increase compared to the same period last year. This sales growth is part of a consistent trend, as Gap Inc. has achieved positive comparable sales for the fifth consecutive quarter.

In terms of profitability, Gap Inc.’s operating margin improved by 140 basis points to 7.5%. Earnings per share (EPS) also experienced significant growth, reaching $0.51, which marks a 24% increase from $0.41 in the same quarter of the previous year. The company ended the quarter with a robust cash balance of approximately $2.2 billion, reflecting a 28% increase from the prior year.

Comparable sales across the Gap Inc. portfolio were evenly split at 2% growth year-over-year. Old Navy saw net sales of $2.0 billion, with a 3% increase and continued market share gains. The Gap brand also performed well, with net sales reaching $724 million and a corresponding 5% rise in comparable sales. However, Banana Republic reported a decline with net sales of $428 million, down 3%, while Athleta experienced a 6% drop in net sales to $308 million.

Gross margin for the quarter was reported at 41.8%, an improvement of 60 basis points compared to the previous year. The company achieved this despite flat merchandise margins due to effective rent, occupancy, and depreciation (ROD) management, which leveraged by 60 basis points. Total operating expenses were approximately $1.2 billion, consistent with the previous year.

In terms of forward guidance, Gap Inc. is reiterating its fiscal 2025 outlook, expecting net sales growth of 1% to 2%, while operating income is projected to increase at a rate of 8% to 10%, excluding any impacts from tariffs. The remaining net impact from anticipated tariffs for fiscal 2025 is estimated between $100 million to $150 million, reflecting the company’s strategic focus on managing costs and maintaining overall performance.

Gap Inc.’s strong first-quarter results reaffirm its strategic priorities and operational discipline, showing resilience amidst a dynamic market environment while continuing its commitment to longer-term growth and brand reinvigoration.