Gap Inc. posts Q4 sales gain, but tariffs, winter storms weigh on results
Gap Inc. reported fourth-quarter sales gains across its three biggest brands — led by its revitalized namesake banner — and its eighth consecutive quarter of same-store sales growth.
But tariffs took a toll on its performance. So did winter storms, which led to the temporary closure of some 800 stores.
“It is important to note that changes in global tariff rates in 2025 had a substantial impact on our profits,” CFO Katrina O'Connell said on the company’s earnings call. “Specifically, tariffs influenced our fiscal year's gross and operating margins by approximately 120 basis points and affected our fourth-quarter gross and operating margins by approximately 200 basis points.”
Gap Inc.’s net income totaled $171 million, with diluted earnings per share of $0.45, for the quarter ended Jan. 31, compared to $206 million and $0.54 per share in the year-ago quarter. Analysts had expected earnings per share of $0.46.
Operating income fell to $229 million from $259 million in the prior-year period, which executives attributed to the impact of tariffs.
Net sales rose 2% to $4.2 billion. Store sales were flat. Online sales increased 5%, accounting for 42% of net sales. Comparable sales increased 3%.
Here is a breakdown of the company's fourth-quarter sales by division.
•Old Navy: Net sales at the company’s biggest brand rose 3% to $2.3 billion. Comparable sales were up 3%.
•Gap: The brand's momentum accelerated in the quarter as net sales rose 8% to $1.1 billion. Comparable sales were up 7%, marking its ninth consecutive quarter of positive comps and well ahead of expectations.
“Returning to its powerful heritage, the brand is once again bridging the generation gap, continuing to attract Gen Z while growing its core customer, and that multigenerational appeal is showing up in the results,” president and CEO Richard Dickson said on the earnings call. “Gap, at its best, is a true original, a pop culture brand that celebrates individuality, united through music, genres, and collaborations that bridge generations and cultures.”
•Banana Republic: Net sales rose 1% to $549 million. Comparable sales rose 4%. The brand delivered its third consecutive quarter of comp growth, reflecting progress in product elevation and sharper marketing and merchandising.
•Athleta: The company’s activewear brand continues to struggle. Net sales decreased 11% to $354 million were down 11%. Comparable sales were down 10%. The company said it remains focused “on rebuilding the brand for the long term.
Full Year
Net sales rose 2% to $15.4 billion. Comparable sales were up 3%. Net income was $816 million with diluted earnings per share of $2.13, compared to $844 million and earnings per share of $2.20 in the prior year. It ended the year with $3 billion in cash on its balance sheet.
"The execution of our playbook is driving consistent results, as we achieved our second consecutive year of topline growth and eighth consecutive quarter of positive comparable sales,” Dickson said in the earnings release. “Financial and operational rigor combined with the strength of our platform drove one of our highest gross margins in the last 25 years and further strengthened our balance sheet."
Gap expects first-quarter revenue of $3.53 billion to $3.57 billion versus estimates of $3.53 billion. The company anticipates full-year revenue of $15.71 billion to $15.86 billion versus estimates of $15.75 billion.
"The execution of our playbook is driving consistent results, as we achieved our second consecutive year of topline growth and eighth consecutive quarter of positive comparable sales,” Dickson said in the earnings release. “Financial and operational rigor combined with the strength of our platform drove one of our highest gross margins in the last 25 years and further strengthened our balance sheet."
Looking ahead, Dickson said, as the company moves into the next phase of its “transformation,” it remains focused on growing its core apparel business “through continuous improvement while thoughtfully seeding growth accelerators that will scale over time.”
“This has all been driven by disciplined execution, which we need to continue to do with better product, better marketing and better storytelling and that’s not easy, but we’re proving that that muscle is getting stronger and stronger now,” he told analysts.
For fiscal 2026, Gap expects sales to grow between 2% and 3%, and adjusted earnings per share of about $2.20 to $2.35.
Gap’s board authorized a new $1 billion share repurchase program, superseding the existing buyback authorization. The company noted that it repurchased seven million shares for $155 million during 2025.
Gap Inc. ended the year with nearly 3,500 store locations in about 35 countries, of which 2,474 were company operated.
