Gap Projects 1.3% Q4 Revenue Growth, 5.2% Operating Margin with Tariff Headwinds
Gap expects Q4 fiscal 2025 revenue of $4.2 billion for a 1.3% year-over-year increase and EPS of $0.45, down 16.7%. Tariffs of 100–110 basis points will drive a 60 basis-point gross margin decline and lift operating expenses by 40 basis points, yielding a 5.2% adjusted operating margin.
1. Q4 Fiscal 2025 Estimates
Gap is set to report fourth-quarter fiscal 2025 revenue of $4.2 billion, reflecting a 1.3% year-over-year increase, and earnings per share of $0.45, a 16.7% decline from the prior year, with consensus estimates remaining unchanged in the past month.
2. Margin and Tariff Impact
The company anticipates a net tariff headwind of 100–110 basis points, driving a 60 basis-point contraction in gross margin and a 40 basis-point increase in operating expense ratio, resulting in an adjusted operating margin of 5.2%.
3. Brand Portfolio Momentum
Old Navy, Banana Republic, Gap and Athleta are forecast to deliver sales growth of 1.8%, 1.1%, 1.5% and 2.9% respectively, fueled by trend-right assortments, enhanced digital commerce initiatives and targeted marketing campaigns.
4. Historical Earnings Surprise
Gap has outperformed consensus estimates by an average of 19.1% over the past four quarters, including a 6.9% earnings beat in the most recent period, underscoring its execution strength despite macro headwinds.