Have you ever walked into a store and felt the buzz of a brand that’s hitting all the right notes, only to notice another corner that’s oddly quiet? That’s the story of Gap’s fiscal second quarter of 2025—a tale of triumphs and stumbles. The specialty apparel giant, known for its portfolio of Gap, Old Navy, Banana Republic, and Athleta, just dropped its latest earnings, and it’s a mixed bag that’s got Wall Street buzzing and investors scratching their heads.
A Turnaround in Progress: Gap’s Q2 2025 Snapshot
Two years into a bold turnaround plan led by CEO Richard Dickson, Gap is trying to claw its way back to the forefront of retail fashion. The company’s Q2 results, covering the three months ending August 2, 2025, show it’s making strides but hitting some potholes along the way. Earnings per share came in at a solid 57 cents, beating Wall Street’s expectations of 55 cents. But revenue? That’s where things get tricky—it clocked in at $3.73 billion, just shy of the $3.74 billion analysts were banking on. The stock took a hit, dropping about 10% in after-hours trading, and the culprit behind the miss is clear: Athleta’s unexpected slide.
Breaking Down the Numbers: A Brand-by-Brand Look
Gap’s portfolio is like a family of siblings—each with its own personality, strengths, and quirks. Let’s dive into how each brand performed in Q2 and what it means for the company’s broader strategy.
Old Navy: The Steady Workhorse
Old Navy, Gap’s largest brand, remains the backbone of the company. It pulled in $2.2 billion in sales, a modest 1% increase from last year. Comparable sales—a key metric for retailers—grew by 2%, though that fell slightly short of the 2.2% analysts expected. Still, Old Navy’s consistency is a bright spot. It’s the reliable sibling that keeps showing up, delivering value-driven basics that resonate with budget-conscious shoppers. But with consumer spending tightening, I can’t help but wonder: can Old Navy keep this momentum going as wallets get squeezed?
Gap: The Namesake’s Quiet Comeback
The Gap brand itself is showing signs of life. Net sales hit $772 million, up 1% year-over-year, with comparable sales climbing a respectable 4%—just a hair below the 4.1% analysts predicted. This marks the seventh straight quarter of comp sales growth, a testament to Dickson’s focus on revitalizing the brand’s cultural relevance. Their recent denim campaign, featuring a nostalgic nod to early 2000s pop culture, has been a hit. More on that later, but for now, it’s clear Gap is finding its groove again.
Banana Republic: The Surprise Star
Banana Republic stole the show this quarter. While net sales dipped 1% to $475 million, comparable sales soared by 4%, blowing past expectations of just 0.2% growth. This safari-chic brand, known for its polished essentials, is finally resonating with shoppers again. It’s like watching an underdog suddenly take the lead in a race—unexpected but thrilling. Dickson’s efforts to reposition Banana Republic as a premium yet accessible option seem to be paying off, and it’s a reminder that sometimes, a little tweaking can go a long way.
Athleta: The Stumbling Sibling
Then there’s Athleta. Oh, Athleta. The athleisure brand, once a darling in the activewear space, saw sales plummet 11% to $300 million, with comparable sales down a painful 9%. What happened? According to Dickson, the brand veered too far from its core customer, chasing new audiences while neglecting its loyal base. It’s a classic case of trying to be everything to everyone and ending up with a muddled identity. The appointment of Maggie Gauger, a Nike veteran, as Athleta’s new CEO signals a reset, but turning this ship around won’t be easy.
We’ve been very transparent to say it’s a year of reset for Athleta. We moved away from our distinctive performance roots.
– Gap CEO Richard Dickson
The Bigger Picture: A Turnaround Tested
Gap’s Q2 results are a microcosm of the challenges facing the retail industry. On one hand, Dickson’s turnaround playbook is working—six straight quarters of comparable sales growth across the portfolio is nothing to sneeze at. On the other hand, Athleta’s struggles and a slight revenue miss show that the road to recovery is bumpy. The company’s sitting on a hefty $2.2 billion cash pile, which gives it some wiggle room, but external pressures like rising tariffs and cautious consumer spending could complicate things.
Speaking of tariffs, Gap updated its outlook, now expecting a $150 million to $175 million hit from tariffs on its Asian-sourced products, up from an earlier estimate of $100 million to $150 million. To mitigate this, the company is tweaking its supply chain, diversifying sourcing, and making “targeted” price adjustments. Dickson insists these moves won’t derail the company’s progress, projecting no further operating income declines in 2026. That’s a bold claim, but if anyone can pull it off, it’s a team that’s already turned Gap from a fading retailer into a cultural contender.
Cultural Relevance: Gap’s Secret Weapon
One of the standout stories from Q2 is Gap’s ability to tap into the cultural zeitgeist. Their “Better in Denim” campaign, featuring a catchy throwback to a 2003 hit, racked up 20 million views in its first three days, 400 million total views, and a staggering 8 billion impressions. It’s the kind of marketing that doesn’t just sell clothes—it starts conversations. As someone who’s seen countless retail campaigns come and go, I find this one particularly clever. It’s nostalgic, bold, and perfectly timed to compete with heavyweights like Levi’s and American Eagle, who’ve also leaned into celebrity-driven denim pushes.
- 20 million views in the first three days of the denim campaign.
- 400 million total views, showcasing massive reach.
- 8 billion impressions, making it a cultural touchstone.
- #1 search on TikTok, proving Gap’s relevance with younger audiences.
This campaign isn’t just about numbers—it’s about reestablishing Gap as a brand that matters. A few years ago, Gap was seen as overly promotional, churning out discounts to move inventory. Now, it’s telling stories, shaping trends, and, dare I say, becoming cool again. But can this cultural momentum translate into consistent sales growth?
Navigating Headwinds: Tariffs and Consumer Trends
The retail landscape is no walk in the park. With consumers pulling back on discretionary purchases like clothing, retailers like Gap have to work harder to stand out. Add in the tariff situation, and it’s like trying to run a race with weights strapped to your ankles. Gap’s proactive approach—reshuffling suppliers, tweaking sourcing strategies, and carefully raising prices—shows they’re not sitting idle. But these moves come with risks. Price hikes, even if targeted, could alienate budget-conscious shoppers, especially at Old Navy.
Here’s where I think Gap’s got an edge: their cash reserves. That $2.2 billion war chest gives them flexibility to weather storms that smaller retailers can’t. It’s like having a financial umbrella in a downpour. Still, the tariff costs are a reminder that external factors can disrupt even the best-laid plans. Dickson’s confidence that these won’t hurt 2026’s operating income is reassuring, but I’ll be watching closely to see if that holds true.
Athleta’s Reset: Can It Bounce Back?
Athleta’s 9% comp sales drop is the elephant in the room. The brand, which ranks as the fifth-largest in the activewear space, lost its way by chasing new customers at the expense of its core audience. It’s a mistake I’ve seen other brands make—trying to broaden appeal without a clear strategy. The new CEO, Maggie Gauger, brings a wealth of experience from her time at a major sportswear giant, and her mandate is clear: reconnect with Athleta’s performance-driven roots.
Athleta’s challenge is to balance innovation with staying true to its core customer base.
– Retail industry analyst
What does this reset look like? For starters, expect a sharper focus on performance-driven apparel—think leggings and sports bras that appeal to serious athletes, not just casual gym-goers. Gauger’s track record suggests she knows how to build a brand that resonates, but turning around a struggling division takes time. If Athleta can regain its footing, it could be a game-changer for Gap’s overall portfolio.
What’s Next for Gap?
Looking ahead, Gap’s reaffirmed its full-year sales growth outlook of 1% to 2%, which aligns with analyst expectations. For the current quarter, they’re projecting slightly better growth—between 1.5% and 2.5%, topping estimates of 2%. This optimism suggests confidence in their strategy, but the retail world is unpredictable. Consumer spending trends, tariff impacts, and Athleta’s recovery will all play a role in whether Gap can keep its streak alive.
| Brand | Net Sales | Comp Sales Growth | Analyst Expectation |
| Old Navy | $2.2B | +2% | +2.2% |
| Gap | $772M | +4% | +4.1% |
| Banana Republic | $475M | +4% | +0.2% |
| Athleta | $300M | -9% | Not available |
The table above sums up the quarter’s performance, but numbers only tell part of the story. Gap’s ability to stay relevant in a crowded market—through savvy marketing, strategic pricing, and a laser focus on brand identity—will determine its long-term success. Personally, I’m rooting for them. There’s something satisfying about watching a legacy retailer fight its way back to the top.
Final Thoughts: A Brand on the Brink
Gap’s Q2 2025 earnings are a reminder that turnarounds are never linear. For every win—like Banana Republic’s surprising strength or Gap’s cultural resurgence—there’s a challenge, like Athleta’s stumble or tariff pressures. Yet, under Dickson’s leadership, the company feels more dynamic than it has in years. They’re not just selling clothes; they’re telling stories, sparking trends, and fighting to stay relevant in a cutthroat industry.
Will Gap keep its momentum? Can Athleta find its footing? And how will rising costs and cautious consumers shape the road ahead? These are the questions that keep investors and retail nerds like me glued to the story. For now, Gap’s a brand worth watching—one that’s proving it’s not ready to fade into the background just yet.
