The Gap, Inc. (GAP)
Profitability ratios
Return on sales
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 38.79% | 34.32% | 39.81% | 34.09% | 37.44% |
| Operating profit margin | 3.76% | -0.44% | 4.86% | -6.25% | 3.50% |
| Pretax margin | 3.73% | -0.89% | 1.94% | -7.99% | 3.22% |
| Net profit margin | 3.37% | -1.29% | 1.54% | -4.82% | 2.14% |
The Gap, Inc.'s profitability ratios have shown varying trends over the past five years.
1. Gross Profit Margin: The gross profit margin has fluctuated, with a high of 39.81% in 2022 and a low of 34.09% in 2021. In 2024, the gross profit margin increased to 38.79%, signaling an improvement in the company's ability to generate revenue after covering the cost of goods sold.
2. Operating Profit Margin: The operating profit margin has also been inconsistent, with negative figures in 2023 and 2021. However, in 2024, the operating profit margin improved to 3.76%, indicating that the company was able to better control its operating expenses and increase profitability from its core business operations.
3. Pretax Margin: The pretax margin has shown a similar trend to the operating profit margin, with negative figures in 2023 and 2021. In 2024, the pretax margin improved to 3.73%, suggesting that the company was able to generate higher profits before accounting for taxes.
4. Net Profit Margin: The net profit margin, a key indicator of overall profitability, has improved steadily over the past five years. In 2024, the net profit margin reached 3.37%, reflecting the company's ability to efficiently manage its expenses and generate profits for its shareholders.
Overall, The Gap, Inc. has made progress in improving its profitability ratios, especially in terms of operating and net profit margins. However, the company should continue to focus on controlling costs and driving revenue growth to sustain and further enhance its profitability in the future.
Return on investment
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.07% | -0.61% | 6.35% | -6.26% | 4.20% |
| Return on assets (ROA) | 4.55% | -1.77% | 2.01% | -4.83% | 2.57% |
| Return on total capital | 15.82% | -1.37% | 11.65% | -18.84% | 13.23% |
| Return on equity (ROE) | 19.34% | -9.05% | 9.40% | -25.44% | 10.59% |
The profitability ratios of The Gap, Inc. have exhibited significant fluctuations over the past five years.
Starting with the Operating return on assets (Operating ROA), we can see that it has been positive in recent years, with a notable increase to 5.07% in 2024 compared to previous years. This indicates that the company's operating income generated from its assets has been improving, suggesting more efficient asset utilization.
The Return on assets (ROA) has also shown improvement, reaching 4.55% in 2024 from negative values in the previous years. This indicates that The Gap, Inc. has been more effective in generating profits from its total assets.
The Return on total capital has fluctuated significantly, with a particularly strong performance in 2024 at 15.82%. This ratio reflects the company's ability to generate profits from both equity and debt capital invested in the business.
Lastly, the Return on equity (ROE) has shown a similar trend to the other profitability ratios, with a significant improvement to 19.34% in 2024. This suggests that the company has been successful in generating returns for its equity holders.
Overall, the improving trend in profitability ratios for The Gap, Inc. signifies enhanced efficiency in utilizing assets and generating profits, which is a positive signal for investors and stakeholders.