Gap (GAP) Q4 2025 earnings

Historic winter storms and ensuing store closures weighed on Gap’s holiday quarter performance 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 the temporary closure of about 800 stores during the peak of the storms, contributing to missed comparable sales for Old Navy and mixed results companywide, the retailer said.

“Old Navy and all the brands were trending better into this weather disruption,” chief financial officer Katrina O’Connell said. “The good news is that trends pick up soon after the storms pass.”

Across the business, which includes Old Navy, Banana Republic, Athleta and Gap’s namesake brand, the retailer reported mixed financial results in the fourth quarter; Ultimately, expectations fell short and consensus was reached on revenue.

Here’s how the retailer is performing compared to Wall Street’s expectations, according to a survey of analysts by LSEG:

• Earnings per share: 45 cents 46 cents expected
• Revenues: $4.24 billion against expectations of $4.24 billion

Gap’s 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 to $206 million, or 54 cents per share, a year earlier. During the quarter, Gap’s gross margin remained under pressure from tariffs, falling to 38.1%, a slightly worse figure than analysts had expected, according to StreetAccount.

Sales rose nearly 2% to $4.24 billion, compared to $4.15 billion a year earlier.

Gap’s guidance was largely in line with expectations but failed to surpass consensus. Revenue expected to increase in the current quarter Between 1% and 2%, compared to expectations of 2%, according to LSEG.

According to LSEG, the company expects full-year sales to grow between 2% and 3%, in line with growth expectations of 2.5%. It issued an adjusted full-year earnings per share outlook, given the $313 million positive regulatory settlement Gap saw this quarter. The company said adjusted earnings per share will be between $2.20 and $2.35, compared to expectations of $2.32, according to LSEG.

O’Connell said Gap did not include the latest changes to tariffs in its outlook because the company believes it is “premature to plan a change” as the situation continues to evolve. Given how hard Gap was hit by President Donald Trump’s global tariffs, which were struck down by the U.S. Supreme Court last month, Gap may offer stronger guidance next quarter because the newly enacted 15% tariff is slightly below previous rates for many countries.

“If [current] If Section 122 tariffs remain in place throughout the year or expire in July, it should lead to a more positive outcome than the outlook we’re presenting today, O’Connell said. “If the remaining rate for the balance of the year were 15%, this would be slightly below the current IEEPA rates projected in our plans, so if this scenario were to occur it would provide a modest benefit to our operating income.”

Gap’s erratic results come more than two years after CEO Richard Dickson’s turnaround plan, and analysts have begun to expect more from the apparel giant. Now that the company has improved profitability, returned to growth and amassed a staggering $3 billion cash pile, Dickson said he’s ready to move on to the next phase of the plan, which is about “building momentum.”

“Our primary focus will be on growing our core apparel business and we will do this through continuous improvement,” Dickson said. “This all comes down to disciplined execution, which we must continue to do with better products, better marketing and better storytelling, and it is not easy, but we are proving that our muscles are now getting stronger and stronger.”

Gap, meanwhile, is turning its eye to growth opportunities for the company, including expansion into its beauty and accessories, fashion and entertainment platform through the recent appointment of a chief entertainment officer. He said the startups will really start to scale next year.

Let’s take a closer look at the performance of each brand: