Gap (GAP) Q4 2025 Earnings

The historic winter storms and subsequent store closures hurt Gap's performance during its holiday quarter and contributed to worse-than-expected results across its portfolio of brands, the retailer said Thursday.

Cold weather, snow and ice across much of the U.S. in January led to about 800 temporary store closures at the peak of the storms, contributing to a loss of comparable sales for Old Navy and mixed results across the company, the retailer said.

“Old Navy and all the brands were actually trending better heading into that climate disruption,” said CFO Katrina O'Connell. “The good news is that the trends recovered immediately after those storms passed.”

Across the business, which includes Old Navy, Banana Republic, Athleta and Gap's namesake brand, the retailer reported mixed results in the fiscal fourth quarter, missing expectations on results and meeting consensus on revenue.

Here's how the retailer fared compared to what Wall Street expected, according to a survey of analysts by LSEG:

• Earnings per share: 45 cents vs. 46 cents expected
• Revenue: $4.24 billion vs. $4.24 billion expected

Gap shares fell as much as 9% in extended trading Thursday.

The company's reported net income for the three months ended Jan. 31 was $171 million, or 45 cents per share, compared with $206 million, or 54 cents per share, a year earlier. During the quarter, Gap's gross margin was hit by tariffs and fell to 38.1%, slightly worse than analysts expected, according to StreetAccount.

Sales rose to $4.24 billion, up about 2% from $4.15 billion a year earlier.

Gap's guidance was largely in line with expectations, but failed to beat consensus. For the current quarter, it expects revenue to increase. between 1% and 2%, compared to expectations of 2%, according to LSEG.

For the full year, the company expects sales to grow between 2% and 3%, in line with expectations for 2.5% growth, according to LSEG. Given a positive $313 million legal settlement that Gap saw during the current quarter, it issued an adjusted full-year earnings per share outlook. The company said it expected adjusted earnings per share of between $2.20 and $2.35, compared with expectations of $2.32, according to LSEG.

Gap did not factor recent rate changes into its outlook because the company believes it is “premature to plan for a change” as the situation continues to evolve, O'Connell said. Given the hit Gap took from President Donald Trump's global tariffs, which were struck down by the U.S. Supreme Court last month, Gap could issue stricter guidance in the next quarter because the newly enacted 15% tariff is slightly below previous rates for many countries.

“If he [current] “If the Section 122 tariffs were to remain in place for the year or expire in July, it should lead to a more favorable outcome compared to the outlook we provide today,” O'Connell said. “If 15% were the rate that would remain in effect for the remainder of the year, that rate is slightly below the current IEEPA rates contemplated in our plans, so it could give us a modest benefit to operating income if that scenario were realized.”

Gap's mixed results come a little more than two years into CEO Richard Dickson's turnaround plan, and analysts are beginning to expect more from the apparel giant. Now that the company has improved profitability, returned to growth and built up a staggering $3 billion in cash, Dickson said he's ready to move on to the next phase of the plan, which is to “build momentum.”

“Our primary goal will be to grow our core apparel business, and we will do so through continuous improvement,” Dickson said. “All of this has been driven by disciplined execution, which we must continue to do with better products, better marketing and better storytelling, and that's not easy, but we're showing that muscle is getting stronger now.”

Meanwhile, Gap is also focusing its attention on growth opportunities for the company, including its expansion into beauty and accessories and its fashion and entertainment platform through the recent appointment of a chief entertainment officer. He said companies will start to really scale next year.

Here's a closer look at how each brand is performing:

Gap's largest and most important brand posted a 3% sales increase to $2.3 billion, and comparable sales also rose 3%, well below the analyst consensus of 4.3%, according to StreetAccount. Despite the failure, Gap said Old Navy's “price-value equation is resonating with consumers” and continues to win over shoppers across a wide range of income levels.

The brightest spot of Gap's quarter came from its namesake brand, whose sales rose 8% to $1.1 billion, with comparable sales up 7%, well above expectations of 4.6%, according to StreetAccount. Under Dickson, the brand has worked to regain its cultural relevance and is winning over a wide range of generations, including younger Gen Z shoppers.

The safari-chic workwear brand posted its third consecutive quarter of positive comparable sales, which rose 4%, beating expectations of 2.5%. Sales increased 1% to $549 million, reflecting progress in both marketing and product assortment. “Menswear continues to gain momentum. Key items like the traveler pants, our cashmere program, really fantastic outerwear that have driven performance, particularly in the quarter,” Dickson said. “Women's performance is becoming much more consistent. We've been strong in denim skirts and sweaters, and as we enter 2026, Banana is really starting to find its momentum.”

The athleisure brand experienced another quarter of declining sales, with revenue falling 11% to $354 million and comparable sales falling 10%. In some ways, the decline reflects a sluggish sports apparel market overall, but the company has also made a number of strategic mistakes, such as targeting the wrong customer and offering products that didn't arrive. Under the direction of the brand's new CEO, Dickson said Athleta has been working to refresh the assortment, bring back customer favorites and increase innovation.