Gap Reports Higher Than Expected Second-Quarter Profit Amid Sales Decline
Despite an overall decline in sales across several of its brands, Gap Inc reported second-quarter net income that exceeded expectations due to a significant tariff refund. The company's total net sales for the quarter were $3.7 billion, down 2% year-over-year, with comparable store sales also falling by 1%. While Old Navy and Athleta saw declines in performance, the Gap brand experienced strong growth driven by demand in key categories like denim and childrenswear. Gap's gross margin improved to 52.8%, largely due to a $417 million benefit from recovered tariffs under IEEPA regulations. Excluding this one-time gain, adjusted gross margins rose slightly. The company also raised its full-year outlook for the Gap brand but revised downward expectations for Old Navy following weaker-than-anticipated second-quarter results. In addition to financial updates, Gap announced leadership changes and a new partnership with Dubai-based Chalhoub Group to expand into the GCC region.
Topics: financial_performance retail tariffs