SAN FRANCISCO, August 27, 2026, 17:30 (EDT)
- Gap shares rose to $24.00 in after-hours trading, marking a 15.44% gain from the closing price of $20.79.
- Comparable sales at Gap-brand increased by 10%, while Old Navy dropped 4% and Athleta declined 12%.
- Adjusted EPS outlook increased to $2.35–$2.45, even as the sales-growth range was lowered.
The Gap, Inc. (NYSE: GAP) surged 15.44% in after-hours trading to $24.00, boosting its market capitalization by roughly $1.16 billion, based on 362 million diluted shares.
The response was not an across-the-board approval of sales. Investors responded to a stronger profit forecast and robust demand for the main brand, even though other parts of the portfolio showed weaker performance.
Gap-brand comparable sales climbed 10% in the second quarter, while net sales advanced 9% to $844 million. This marks a tenth straight quarter of comparable growth Gap fiscal Q2 release.
The strength was notable as other major brands showed different results. Old Navy reported a 4% decrease in sales to $2.1 billion, and Athleta’s sales dropped 12% to $264 million.
| Brand | Q2 net sales | YoY sales | Comparable sales |
|---|---|---|---|
| Old Navy | $2.1 billion | down 4% | down 4% |
| Gap | $844 million | up 9% | up 10% |
| Banana Republic | $478 million | up 1% | up 3% |
| Athleta | $264 million | down 12% | down 12% |
Total revenue declined by 2% to $3.65 billion, just short of analysts’ forecast of $3.69 billion. Adjusted earnings per share reached $0.52, topping the consensus estimate of $0.48 Reuters.
Adjusted gross margin increased by 20 basis points, reaching 41.4%. Improved merchandise margins at Gap and tariff mitigation countered increased promotional activity at Old Navy.
Management increased its full-year adjusted EPS forecast by $0.05 at both the lower and upper bounds. The updated guidance of $2.35–$2.45 reflects midpoint growth of 12.7% over fiscal 2025.
Gap has adopted a more cautious sales outlook, now projecting fiscal-year growth between 1% and 1.5%, reduced from the prior 1% to 2% range, following a cut to its comparable-sales expectations for Old Navy.
Old Navy is undergoing a turnaround. Gap named Michael Francis as the new president and CEO of the brand after seasonal product fell short and foot traffic declined.
The balance sheet offers management flexibility. Gap closed the quarter holding $2.5 billion in cash and short-term investments, alongside $399 million left under its share repurchase authorization.
Shareholder returns so far this year totaled $726 million, comprising $601 million from buybacks and $125 million in dividends.
Wall Street is split. MarketBeat tracks 18 analysts who assign a Moderate Buy consensus, with an average price target of $26.29 analyst consensus.
The after-hours share price of $24.00 stands 8.7% under the target. This level assigns a multiple of 10 to the expected midpoint of adjusted EPS.
Risks: Limited liquidity outside regular trading sessions may amplify price swings. Old Navy and Athleta continue to underperform, and tariffs, fuel expenses and discounting may impact margins.
The upcoming challenge is conversion. Investors are counting on the flagship brand’s strength to surpass the impact from Gap’s two underperforming labels.
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