Gap Inc has posted second quarter net sales of US$3.65 billion, down 2 per cent on last year, with the Gap brand itself the sole double-digit performer at a point when it is rebuilding its Australian presence.
The Gap brand lifted net sales 9 per cent to US$844 million on comparable sales growth of 10 per cent, driven by denim, fleece and the kids and baby ranges. Group comparable sales slipped 1 per cent.
That momentum underpins the brand's third run at the Australian market. Gap returned in March through local distributor Fashionata, initially across 27 Myer stores and Myer online, before adding The Iconic and then a dedicated Australian website in recent weeks.
The two earlier attempts did not hold. OrotonGroup ran six Gap stores under franchise before closing them across 2017 and 2018, and a digital-only relaunch under True Alliance was wound up in 2024.
Old Navy, which has never traded in Australia, was the weak point globally. Net sales fell 4 per cent to US$2.1 billion with comparable sales down the same amount, on pressure in the women's seasonal assortment and an unanticipated slowdown in traffic. The company has named Michael Francis as Old Navy chief executive from 2 November, succeeding Haio Barbeito.
Banana Republic lifted net sales 1 per cent to US$478 million with comparable sales up 3 per cent, while Athleta fell 12 per cent to US$264 million.
President and chief executive Richard Dickson said the company was "particularly proud of the momentum at the Gap brand".
Gross margin reached 52.8 per cent, carrying an 11.4 percentage point benefit from expected tariff recovery. Gap received US$95 million in tariff refunds during the quarter and put the money towards lowering product costs. Adjusted gross margin was 41.4 per cent and adjusted operating margin 7.1 per cent.
Net income was US$501 million for diluted earnings per share of $1.38, or US$190 million and 52 cents on an adjusted basis.
The group narrowed full year net sales growth guidance to 1 to 1.5 per cent and lifted adjusted operating margin guidance to 7.4 to 7.6 per cent, with adjusted EPS of $2.35 to $2.45.