Gap Q4 Sales Rise 2% to $4.2B; EPS $0.45, Margins Pressured
Gap delivered Q4 net sales of $4.2 billion, up 2%, with 3% comparable sales growth and EPS of $0.45. Tariffs reduced gross margin by 200 basis points, while free cash flow reached $823 million and management set 2026 net sales growth of 2–3% with flat to slightly higher margins.
1. Q4 Financial Results
Gap Inc reported Q4 net sales of $4.2 billion, up 2% year-over-year, with comparable sales growing 3%. Earnings per share were $0.45, marking the company’s eighth consecutive quarter of positive comps across Gap, Old Navy and Banana Republic.
2. Tariff Impact
Changes in global tariff rates in 2025 reduced fourth-quarter gross and operating margins by approximately 200 basis points, resulting in a gross margin of 38.1% and an operating margin of 5.4%.
3. Cash Flow and Liquidity
Free cash flow reached $823 million in fiscal 2025, while year-end cash and short-term investments totaled $3 billion, the highest balance in nearly two decades.
4. 2026 Outlook and Capital Return
Management guides fiscal 2026 net sales growth of 2–3% with flat to slightly higher gross margins. The board approved a $1 billion share repurchase authorization and raised the quarterly dividend by 6% to $0.175 per share.