Thanks to the austerity program: Gap is back in the black

The US clothing group Gap Inc. returned to profitability in the 2023/24 financial year. However, the parent company of the Gap, Old Navy, Banana Republic and Athleta retail chains suffered a further decline in sales.

Group sales fell by almost five percent

In the last financial year, which ended on February 3rd, group sales amounted to 14.9 billion US dollars (13.6 billion euros), according to a statement published on Thursday evening. This means that it fell by 4.7 percent compared to the previous year. About two percentage points of the decline was due to the sale of the Gap China division, the company said.

Old Navy’s revenue was $8.2 billion, roughly in line with the previous year. The Gap brand suffered an eleven percent decline to $3.3 billion, not least due to the sale of its China business. Banana Republic’s sales fell by eight percent to $1.9 billion, while Athleta’s sales fell by eight percent to $1.4 billion.

The clothing retailer has an annual net profit of $502 million

Thanks to extensive cost-cutting measures, reduced freight costs and lower discounts, the group was able to significantly improve its results. Operating profit reached 560 million euros, after posting an operating loss of 69 million US dollars in the previous year. Adjusted for special items, which included restructuring expenses and income from a real estate sale, operating profit reached $606 million.

The bottom line was a net profit of 502 million US dollars (459 million euros). The group had closed the previous year with a corresponding deficit of $202 million.

For the current 2024/25 financial year, management expects sales to be in the same range as the previous year. Operating profit is expected to increase by a percentage “in the low to mid-teens.”

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