Gap shares fall on earnings miss despite continued sales growth

Gap Inc (NYSE:GPS) shares fell astir 14% aft the retailer reported fourth-quarter results that came successful somewhat beneath Wall Street expectations.

The apparel institution posted net per stock of $0.45, missing the $0.46 statement estimate, portion gross totaled $4.23 billion, somewhat beneath expert forecasts of $4.24 billion.

For the 4th ended January 31, nett income roseate 2% twelvemonth implicit twelvemonth to astir $4.2 billion, with comparable income up 3%, marking the company’s eighth consecutive 4th of affirmative comparable income growth. Online income accrued 5% and accounted for 42% of full revenue, portion store income were flat.

Brand show was mixed. Gap posted the strongest maturation with comparable income up 7% successful the quarter, portion Old Navy and Banana Republic each reported 3% and 4% comparable income growth, respectively. Athleta continued to struggle, with comparable income declining 10% successful the quarter.

For the afloat fiscal year, Gap marque comparable income roseate 6%, Old Navy accrued 3%, and Banana Republic gained 3%, portion Athleta declined 9%.

Gross borderline came successful astatine 38.1%, down 80 ground points from a twelvemonth earlier. The institution said merchandise margins declined chiefly owed to an estimated tariff interaction of astir 200 ground points, though higher mean selling prices from little discounting partially offset the pressure.

Operating income for the 4th was $229 million, representing an operating borderline of 5.4%, portion nett income totaled $171 million.

For fiscal 2025, Gap reported nett income of $15.4 billion, up 2% twelvemonth implicit year, and comparable income maturation of 3%. Operating income reached $1.1 billion, with an operating borderline of 7.3%, exceeding the company’s outlook. Net income for the twelvemonth was $816 million, oregon $2.13 per share.

“The execution of our playbook is driving accordant results, arsenic we achieved our 2nd consecutive twelvemonth of topline maturation and eighth consecutive 4th of affirmative comparable sales,” Gap CEO Richard Dickson said successful a statement.

“Financial and operational rigor combined with the spot of our level drove 1 of our highest gross margins successful the past 25 years and further strengthened our equilibrium sheet.”