Gap’s Q2 Earnings Call: Our Top 5 Analyst Questions

September 04, 2025 at 01:31 AM EDT

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Gap’s second quarter results reflected steady execution of its brand reinvigoration strategy, with management crediting progress at Old Navy, Gap, and Banana Republic for driving 1% same-store sales growth despite a challenging environment. CEO Richard Dickson pointed to “greater discipline” and targeted category investments, especially in denim and activewear, as key factors sustaining performance. Although Athleta underperformed, management emphasized that rigorous cost controls helped preserve margins even as certain product segments required heavier discounting.

Is now the time to buy GAP? Find out in our full research report (it’s free).

Gap (GAP) Q2 CY2025 Highlights:

Revenue: $3.73 billion vs analyst estimates of $3.74 billion (flat year on year, in line)
Adjusted EPS: $0.57 vs analyst estimates of $0.55 (3.8% beat)
Adjusted EBITDA: $414 million vs analyst estimates of $395.6 million (11.1% margin, 4.7% beat)
Revenue Guidance for Q3 CY2025 is $3.91 billion at the midpoint, roughly in line with what analysts were expecting
Operating Margin: 7.8%, in line with the same quarter last year
Locations: 3,510 at quarter end, down from 3,568 in the same quarter last year
Same-Store Sales rose 1% year on year (3% in the same quarter last year)
Market Capitalization: $8.38 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Gap’s Q2 Earnings Call

Alex Straton (Morgan Stanley) asked about the impact of tariffs on guidance. CFO Katrina O’Connell explained that tariffs were the main reason for a lower profit outlook but emphasized ongoing mitigation efforts and confidence in future margin improvement.
Marni Shapiro (The Retail Tracker) questioned whether Old Navy’s improved in-store experience was due to increased spending. CEO Richard Dickson clarified that enhancements were achieved through more efficient merchandising rather than higher costs.
Brooke Roach (Goldman Sachs) inquired about sustaining Gap’s momentum into the holiday season. Dickson expressed confidence in the brand’s playbook and cited strong campaign engagement metrics.
Matthew Boss (JPMorgan) pressed for details on drivers behind the expected revenue acceleration and margin outlook. Dickson and O’Connell pointed to category leadership at Old Navy and Gap, early back-to-school trends, and robust cost management.
Lorraine Hutchinson (Bank of America) asked about pricing strategy in response to tariffs. O’Connell said targeted pricing actions are being used as one lever among several, with a focus on maintaining value for consumers.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the effectiveness of tariff mitigation efforts and their impact on operating margins; (2) signs of sustained category leadership and comp growth at Old Navy and Gap, particularly around back-to-school and holiday campaigns; and (3) concrete evidence of progress in Athleta’s turnaround under new leadership. Execution on inventory management and marketing efficiency will also be key factors to monitor.

Gap currently trades at $22.77, up from $21.67 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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Gap’s Q2 Earnings Call: Our Top 5 Analyst Questions

Gap (GAP) Q2 CY2025 Highlights:

Our Top 5 Analyst Questions From Gap’s Q2 Earnings Call

Catalysts in Upcoming Quarters

Our Favorite Stocks Right Now

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