Gap Inc. reported first-quarter fiscal 2025 net income of $193 million, translating to diluted earnings per share of $0.51, which surpassed analyst estimates of $0.44. Net sales for the quarter increased 2% year-over-year to $3.46 billion, also exceeding Street forecasts of $3.42 billion.
The company achieved its ninth consecutive quarter of market share gains and saw operating income grow 27% to $260 million, resulting in an operating margin of 7.5%, up 140 basis points. Gross margin expanded by 60 basis points to 41.8%, reflecting continued operational rigor.
However, Gap Inc. warned that its fiscal 2025 outlook does not reflect the potential effect of tariffs, which could result in a gross estimated incremental cost of $250 million to $300 million if current rates remain. After mitigation strategies, the company estimates a net impact of $100 million to $150 million to fiscal 2025 operating income, primarily weighted to the back half of the year, leading to a cautious market reaction.
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