Gap (GAP) Q2 2026 Earnings
GAAP EPS of $1.38 includes net IEEPA tariff recovery of approximately $417 million (tariff refunds of ~$512 million less ~$95 million vendor appreciation commitment) and $5 million related interest income. Adjusted EPS of $0.52 excludes these items.
How Did GAP Stock React to Q2 2026 Earnings?
S&P 500 over the same 30 days: −0.87%.
Did GAP Beat Earnings? Q2 2026 Results
Yes. Gap reported Q2 2026 earnings of $0.52 a share on Aug 27, 2026, beating the $0.49 consensus estimate by 5.8%. Revenue was $3.7B against a $3.7B estimate.
Gap Inc. delivered a mixed second quarter for fiscal 2026, beating profit expectations while falling short on sales, as brand divergence defined the period. Adjusted diluted EPS of $0.52 topped the $0.49 consensus by roughly 5.84%, supported by gross margin expansion and operational discipline, even as net sales of $3.65 billion slipped 2% year-over-year and came in slightly below the $3.69 billion analysts had anticipated. The story behind the numbers was sharply split: the Gap brand surged with 10% comparable sales growth, while Old Navy, the company's largest brand, dragged on results with a 4% comparable sales decline tied to weakness in women's seasonal assortment and unexpected traffic softness. Gap responded by naming veteran retail executive Michael Francis as Old Navy's incoming president and CEO, a leadership move that sent shares up nearly 13% following the report. Looking ahead, the company narrowed its full-year net sales growth outlook to 1% to 1.5% and raised its adjusted diluted EPS guidance to $2.35 to $2.45, signaling cautious confidence in the path forward.
- Gap brand double-digit comparable sales growth driven by destination categories including denim, fleece, and kids and baby
- Adjusted gross margin expanded 20 basis points YoY driven by merchandise margin improvement and tariff mitigation strategies
- Average unit retail increased across all brands
- Net IEEPA tariff recovery of approximately $417 million boosted reported results
- Old Navy experienced pressure in women's seasonal assortment and unanticipated traffic slowdown
- Athleta comparable sales declined 12% as brand continues rebuild efforts
“While top-line results in the second quarter were modestly below expectations, continued operational and financial rigor contributed to gross margin strength resulting in the Company exceeding profit expectations.”
Gap CEO, on the earnings call
What Is Gap's Outlook?
Gap Inc. updated its full-year fiscal 2026 outlook, narrowing net sales growth to up 1% to 1.5% year-over-year (from up 1% to 2%), reflecting Old Navy's weaker Q2 performance. Old Navy comparable sales are now expected to be flat to down 1% (previously flat to up 1%), while Gap brand comps are raised to high-single to low double-digit growth (from high-single digits). Adjusted operating margin is raised to about 7.4% to 7.6% (from 7.3% to 7.5%). Adjusted diluted EPS is raised to approximately $2.35 to $2.45 (from $2.30 to $2.40). Reported diluted EPS expected at approximately $3.77 to $3.87. Capital expenditures remain at approximately $650 million. For Q3 fiscal 2026, net sales expected up 1.5% to 2.5% YoY, gross margin up about 25 to 75 basis points, with slight operating expense leverage. Tariff assumptions were updated following Section 301 announcement, with approximately $15 million of net tariff relief expected, concentrated in Q4.
GAP YoY Financials
| Metric | Q2 2026 | Q2 2025 | Year over year |
|---|---|---|---|
| Revenue | $3.7B | $3.7B | −2.0% |
| Gross Profit | $1.9B | $1.5B | +25.6% |
| Operating Income | $676.0M | $292.0M | +131.5% |
| Net Income | $501.0M | $216.0M | +131.9% |
GAP Revenue by Segment
GAP Revenue by Geography
When Does Gap Report Next?
Figures from SEC filings and company reports. Not investment advice.