Gap Embraces AI, Shifts Focus to ‘Continuous Improvement Through Innovation’

After a year spent “fixing the fundamentals,” Gap Inc. is transitioning its focus in 2025 to “continuous improvement through innovation,” Gap President and CEO Richard Dickson said Thursday (March 6).

Speaking during the company’s quarterly earnings call, Dickson said Gap is pursuing innovation in artificial intelligence (AI) and other areas.

The company is doing so after a year in which Gap — the parent company of Old Navy, Gap, Banana Republic and Athleta — saw all four of its brands achieve comparable sales that were flat or positive for the year and saw all four brands gain market share, according to a Thursday earnings release.

Speaking of the company’s “brand reinvigoration” efforts detailed in earlier earnings calls, Dickson said the brands continue to execute on that playbook, are each at different points in the process and have each made improvements.

“We continued to perform while we transform, delivering another quarter that exceeded financial expectations and underscored the meaningful progress we’re driving across our strategic priorities,” Dickson said during the call.

In 2025, Gap Chief Technology Officer Sven Gerjets will continue pursuing plans to leverage technology that he began when he joined the company last summer, Dickson said.

The company formed an Office of AI that is focused on AI innovation across its operations.

“In 2025, we will be developing AI monetization opportunities relative to the consumer experience, product to market, as well as organizational productivity,” Dickson said. “Now, having organized the various ways we can use AI to enable value creation, we’re prepared to mobilize against this framework with intention.”

Gap Chief Financial Officer Katrina O’Connell said during the call that the company is leveraging AI to, among other things, “create more elevated experiences for our customers with things like personalization.”

Looking ahead, Gap expects its net sales to be flat to up slightly year over year in the first quarter and up 1% to 2% year over year for full year 2025, according to a presentation released Thursday.

Addressing tariffs during the call, O’Connell said the company sources less than 10% of its product from China and less than 1% from Canada and Mexico combined.

“We’ve been operating in a highly dynamic backdrop for the last few years, and we’re expecting the same for fiscal 2025,” O’Connell said. “As a result, we’ve taken a balanced view with our guidance and remain focused on controlling the controllable.”