Historic winter storms, which resulted in store closures, weighed on Gap’s performance during its fourth quarter of 2025 and saw shares tank over 8% in after-hours trade on Thursday night (Friday AEDT).
The harsh winter weather throughout much of the United States in January led to about 800 temporary closures at the storms’ peak, contributing to a miss on comparable sales for Old Navy and mixed company-wide results.
“Old Navy and all the brands were actually trending better heading into that weather disruption,” finance chief Katrina O’Connell said.
“The good news is the trends recovered immediately after those storms passed.”
Net sales for the fourth quarter were up 2% to US$4.2 billion, matching analysts' expectations.
This was mainly driven by Online sales, which accounted for 42% of total net sales.
Earnings per share fell slightly below analysts' expectations of 46 cents per share, coming in at 45 cents per share.
Net income for the three months was $171 million.
For the full year, net sales were up 2% to $15.4 billion, and net income came in at $816 million or $2.13 per share.
Despite being heavily impacted by the winter storms, fourth-quarter net sales were up 3% year-over-year to $2.3 billion.
The only brand to report a decline in net sales was Athleta, which dropped 11% to $354 million.
For fiscal 2026, the company expects net sales to rise 2% to 3% and adjusted diluted earnings per share of $2.20 to $2.35.
“Our aspirations remain high, and our teams are energised as we continue to drive toward becoming a high-performing house of iconic American brands that delivers long-term value for our shareholders,” President and CEO Richard Dickson said.
Gap didn’t factor tariffs into its outlook as O’Connell said it would be premature to plan for a change”, as the situation continues to evolve.
This comes as U.S. President Donald Trump enacted new 15% tariffs, which are below the previous rates for many countries.
