Gap Inc. Projected Earnings Signal Growth in Q1 2025

Fiscal Q1 Earnings Announcement Scheduled

Gap Inc. (NYSE: GAP) will announce its fiscal first-quarter earnings on Thursday, May 29, 2025. Analysts expect earnings of 45 cents per share and revenue of $3.42 billion. This represents a 7% year-over-year increase in earnings and a 1% increase in sales, compared to last year’s figures of 42 cents per share and $3.39 billion in revenue.

Future Growth Projections

For fiscal year 2025, Gap anticipates a sales rise of 1% to 2%, along with a projected operating income increase of 8% to 10%. This growth will be driven by investments in brand development and supply chain improvements. Investors should focus on Gap’s strategies for revitalizing the Athleta brand and optimizing digital and physical retail plans. The company, valued at $11 billion, reported $15 billion in revenue over the last twelve months, achieving $1.1 billion in operating profits and a net income of $844 million.

Implications for Event-Driven Traders

Traders might seek an advantage from historical patterns, positioning before earnings announcements or reacting after. For those preferring lower volatility, alternative investment options like the Trefis High Quality portfolio, which has outperformed the S&P 500 with over 91% returns, may be worth considering.

Historical Earnings Reaction Insights

Over the last five years, Gap recorded 19 earnings data points, with 14 showing positive one-day returns and five negative. This results in a success rate of approximately 74%. If focused on the last three years, this rate improves to 82%. The median return for positive instances is 7.6%, while negative returns average -6.1%.

Understanding Return Correlations

A strategic method involves examining the correlation between short-term (1D) and medium-term (5D and 21D) returns post-earnings. Identifying pairs with the highest correlation may support informed trading decisions. For example, a positive 1D return may encourage traders to position themselves long for the following 5 days.

GAP Correlation Between 1D, 5D and 21D Historical Returns

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.