Fair Value Measurements

6 Months Ended

Aug. 02, 2025

The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company categorizes financial assets and liabilities recorded at fair value based upon a three-level hierarchy that considers the related valuation techniques.

There were no material purchases, sales, issuances, or settlements related to recurring level 3 measurements for the 13 and 26 weeks ended August 2, 2025 or August 3, 2024.

Financial assets and liabilities measured at fair value on a recurring basis and cash equivalents are as follows:


			Fair Value Measurements at Reporting Date Using
($ in millions)	August 2, 2025		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	235	$	225	$	10	$	—
Short-term investments	238		117		121		—
Derivative financial instruments	9		—		9		—
Deferred compensation plan assets	42		42		—		—
Other assets	3		—		—		3
Total	$	527	$	384	$	140	$	3
Liabilities:
Derivative financial instruments	$	6	$	—	$	6	$	—
			Fair Value Measurements at Reporting Date Using
($ in millions)	February 1, 2025		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	310	$	302	$	8	$	—
Short-term investments	253		132		121		—
Derivative financial instruments	33		—		33		—
Deferred compensation plan assets	36		36		—		—
Other assets	3		—		—		3
Total	$	635	$	470	$	162	$	3
Liabilities:
Derivative financial instruments	$	—	$	—	$	—	$	—
			Fair Value Measurements at Reporting Date Using
($ in millions)	August 3, 2024		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	9	$	3	$	6	$	—
Short-term investments	246		124		122		—
Derivative financial instruments	16		—		16		—
Deferred compensation plan assets	40		40		—		—
Other assets	4		—		—		4
Total	$	315	$	167	$	144	$	4
Liabilities:
Derivative financial instruments	$	3	$	—	$	3	$	—

We have highly liquid fixed and variable income investments classified as cash equivalents and short-term investments. All highly liquid investments with original maturities of three months or less at the time of purchase are classified as cash and cash equivalents on the Condensed Consolidated Balance Sheets. Our cash equivalents are comprised of money market funds and time deposits recorded at amortized cost, which approximates fair value, as well as debt securities recorded at fair value using market prices for identical or similar assets. We also have highly liquid investments with original maturities of greater than three months and less than two years that are classified as short-term investments on the Condensed Consolidated Balance Sheets. These debt securities are also recorded at fair value using market prices for identical or similar assets.

There were no material realized or unrealized gains or losses or impairment charges related to short-term investments during the 13 and 26 weeks ended August 2, 2025 or August 3, 2024.

Derivative financial instruments primarily include foreign exchange forward contracts. See Note 6 of Notes to Condensed Consolidated Financial Statements for information regarding currencies hedged against the U.S. dollar.

We maintain the Gap Inc. Deferred Compensation Plan (“DCP”), which allows eligible employees to defer base compensation and bonus up to a maximum percentage, and non-employee directors to defer receipt of a portion of their Board fees. Plan investments are directed by participants and are recorded at market value and designated for the DCP. The fair value of the Company’s DCP assets is determined based on quoted market prices, and the assets are recorded in other long-term assets on the Condensed Consolidated Balance Sheets.

Nonfinancial Assets

We review the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of the long-lived assets is determined using level 3 inputs and based on discounted future cash flows of the asset or asset group using a discount rate commensurate with the risk. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores is at the store level.

There were no material impairment charges recorded for long-lived assets during the 13 and 26 weeks ended August 2, 2025 or August 3, 2024.

We review the carrying amount of goodwill and other indefinite-lived intangible assets for impairment annually and whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable.

There were no impairment charges recorded for goodwill or other indefinite-lived intangible assets during the 13 and 26 weeks ended August 2, 2025 or August 3, 2024.