Gap the largest specialty apparel company in the U.S., with a portfolio of well-known brands including Old Navy, Gap, Banana Republic, and Athleta, has announced its financial results for the fourth quarter and fiscal year ending February 1, 2025.
Strong Performance in Fiscal Year 2024
President and Gap Chief Executive Officer Richard Dickson expressed satisfaction with the company’s achievements, noting that Gap Inc. surpassed financial expectations for the eighth consecutive quarter. “For the full year 2024, we delivered positive comparable sales in all four quarters, achieved one of the highest gross margins in two decades, and significantly improved our operating margin compared to the prior year,” he stated. Dickson emphasized that the company’s transformation is progressing well, with a strengthened operational framework and reinvigorated brand positioning. He reaffirmed that 2025 will mark an exciting phase in Gap Inc.’s journey toward long-term shareholder value as a high-performing house of iconic American brands.
The company clarified that fiscal year 2024 had 52 weeks, whereas fiscal year 2023 had 53 weeks. To ensure an accurate comparison, fourth-quarter and full-year 2024 results were analyzed against 13-week and 52-week periods ending February 3, 2024.
Fourth Quarter Fiscal 2024 Financial Results
- Net Sales: $4.1 billion, reflecting a 3% decline compared to last year. This includes approximately a 7-percentage-point negative impact due to the loss of the 53rd week.
- Store Sales: Decreased 4% year-over-year.
- Online Sales: Decreased 2%, with online sales accounting for 41% of total net sales.
- Comparable Sales: Increased by 3%.
- Gross Margin: Remained flat at 38.9%.
- Merchandise Margin: Improved by 20 basis points.
- Rent, Occupancy, and Depreciation (ROD): Increased 20 basis points as a percentage of sales.
- Operating Expense: $1.4 billion.
- Operating Income: $259 million, with an operating margin of 6.2%.
- Effective Tax Rate: 24.3%.
- Net Income: $206 million.
- Diluted Earnings per Share: $0.54.
Full Year Fiscal 2024 Financial Results
- Net Sales: $15.1 billion, marking a 1% increase year-over-year, despite a 1-percentage-point negative impact from the absence of the 53rd week. Excluding this impact, sales grew 2%.
- Store Sales: Remained flat compared to the previous year.
- Online Sales: Increased by 4% and accounted for 38% of total net sales.
- Comparable Sales: Rose by 3%.
- Gross Margin: Improved significantly to 41.3%, reflecting a 250-basis-point expansion.
- Merchandise Margin: Increased by 210 basis points, driven by lower commodity costs.
- Rent, Occupancy, and Depreciation (ROD): Leveraged 40 basis points due to increased net sales.
- Operating Expense: Reduced to $5.1 billion, down 2% compared to last year’s reported figures.
- Operating Income: $1.1 billion, with an operating margin of 7.4%.
- Effective Tax Rate: 25.8%.
- Net Income: $844 million.
- Diluted Earnings per Share: $2.20.
Balance Sheet and Cash Flow Highlights
- Cash Reserves: Ended fiscal year 2024 with $2.6 billion in cash, cash equivalents, and short-term investments, marking a 38% increase from the prior year.
- Cash Flow from Operations: Generated $1.5 billion in net cash from operating activities.
- Free Cash Flow: $1.0 billion, calculated as net cash from operating activities minus capital expenditures.
- Ending Inventory: $2.1 billion, reflecting a 3.6% increase year-over-year.
- Capital Expenditures: Totaled $447 million.
- Dividends: Paid a fourth-quarter dividend of $0.15 per share, totaling $56 million.
- Share Repurchases: Acquired 3 million shares for approximately $75 million, concluding the fiscal year with 374 million shares outstanding.
- Total Shareholder Returns: Distributed $300 million through dividends and share repurchases during fiscal year 2024.
Fiscal Year 2025 Outlook
The Board of Directors approved a first-quarter fiscal year 2025 dividend of $0.165 per share, representing a 10% increase from the previous quarter’s dividend. Gap Inc. remains focused on maintaining its growth trajectory, strengthening brand equity, and optimizing operational efficiency to deliver sustained value to shareholders.
As Gap Inc. enters fiscal year 2025, its strategic priorities remain centered on enhancing customer experiences, leveraging digital innovations, and streamlining operations to drive profitability. With solid financials and an optimistic outlook, the company is poised for continued success in the competitive retail landscape.
