Gap Achieves 25-Year High Gross Margin and Eight Straight Positive Comps
Gap delivered eight straight quarters of positive comparable sales—Gap brand comps +7%, Old Navy +3%, Athleta -10%—and achieved a 25-year high gross margin. The company ended 2025 with $3 billion cash, authorized a $1 billion buyback and warned of a 150–200 bps Q1 margin headwind from tariffs.
1. Turnaround and Comparable Sales
Over the past two years, Gap has delivered eight consecutive quarters of positive comparable sales, with the flagship Gap brand up 7%, Old Navy up 3%, Banana Republic posting three straight quarters of 4% growth, and Athleta comps down 10% in Q4.
2. Margin Improvement and Financial Position
Gap recorded its highest gross margin in 25 years in 2025, reflecting improved cost management and pricing. The company closed the year with $3 billion in cash, launched a $1 billion share repurchase authorization and raised its dividend.
3. Q1 Tariff Pressure Outlook
Management cautioned that new tariffs are expected to reduce Q1 gross margins by 150–200 basis points, presenting a near-term headwind to profitability.