Gap Inc., the largest specialty apparel retailer in the U.S. with a portfolio of iconic brands including Old Navy, Gap, Banana Republic, and Athleta, reported its second-quarter financial results showing mixed performance, with earnings per share beating expectations but revenue falling short.
The company’s Q2 revenue was $3.73 billion, just below the expected $3.74 billion, while its earnings per share were 57 cents compared to the 55 cents anticipated. Sales increased to $3.73 billion, up slightly from $3.72 billion a year earlier.
Despite the solid financial results, Gap stock dropped after the company’s warning that tariffs will impact its profits going forward.
In May, Gap reported that expected tariffs would cost between $100 million and $150 million on a net basis. Its most recent report now indicates that these costs will range from $150 million to $175 million.
Gap now forecasts its full-year operating margin to be between 6.7% and 7%, down from 7.4% in the previous fiscal year, mainly due to a tariff impact of 1 to 1.10 percentage points.
President and CEO, Richard Dickson, told investors, “In the second quarter, Gap Inc. overdelivered on profit expectations and achieved our topline goals. With positive comps for the sixth consecutive quarter, fueled by our three largest brands Old Navy, Gap and Banana Republic, it’s clear our strategy is working.”
“Two years ago, I shared my vision for leading Gap Inc. into an exciting new chapter. Since then, we’ve built a stronger foundation with more relevant brands, a sharper operating platform, and a more unified culture while consistently demonstrating agility and resilience in dynamic environments. We are advancing our transformation with discipline, clarity, and momentum and remain committed to building a high-performing company that delivers sustainable, long-term value for our shareholders.”
In an interview following the announcement, Dickson stated, “We’ve paid a lot of attention, trying to court a new customer, and ultimately didn’t have enough offerings for our core customer. As we balance that out, we’ve been very transparent to say it’s a year of reset for us.”
By CEO NA Editorial Staff
