Gap (GAP) Q1 2026 Earnings
GAAP EPS of $0.90 includes a $313 million net gain from a credit card interchange fee litigation settlement and a $50 million charitable contribution made concurrently. Adjusted (non-GAAP) EPS of $0.38 excludes these items.
How Did GAP Stock React to Q1 2026 Earnings?
S&P 500 over the same 30 days: −1.42%.
Did GAP Beat Earnings? Q1 2026 Results
No. Gap reported Q1 2026 earnings of $0.38 a share on May 28, 2026, missing the $0.48 consensus estimate by 20.8%. Revenue was $3.5B against a $3.5B estimate.
Gap Inc. delivered a disappointing first quarter of fiscal 2026, missing Wall Street expectations on both the top and bottom lines as brand-level divergence and tariff headwinds weighed on results. Adjusted diluted EPS came in at $0.38, falling roughly 21% short of the $0.48 consensus estimate, while net sales of $3.50 billion grew just 1% year-over-year and edged below the $3.52 billion analysts had anticipated. The story behind the numbers was uneven: the Gap brand posted 10% comparable sales growth on the strength of denim and fleece, but Athleta's comparable sales declined 11% and Old Navy, the company's largest brand at $2.00 billion in sales, stumbled on fashion missteps in women's dresses, a miss that CEO Richard Dickson attributed to internal merchandising errors. Gross margin contracted 130 basis points to 40.5%, with tariffs alone dragging merchandise margin by an estimated 200 basis points. Shares fell sharply on the results. Looking ahead, Gap raised its full-year adjusted diluted EPS outlook to $2.30 to $2.40 while trimming net sales growth expectations to 1% to 2%, signaling a pivot toward margin discipline over revenue acceleration.
- Gap brand delivered 10% comparable sales growth driven by culturally relevant storytelling and strength in denim, fleece, and kids/baby
- Ninth consecutive quarter of positive comparable sales across the portfolio
- Average unit retail increased across all brands
- Store sales increased 3% year-over-year
- Underlying merchandise margin expansion driven by Gap brand strength and improved inventory management
- Old Navy continued to win in denim, active, and kids/baby categories
“In the first quarter, Gap Inc. delivered continued progress against our strategic priorities, including further market share gains and achieving our ninth consecutive quarter of positive comparable sales. Gap brand delivered a standout quarter with a double-digit comp, marking one of the brand's strongest performances in over two decades. Performance across our other brands was varied, reflecting both the different stages of their transformation and some brand-specific dynamics.”
Gap CEO, on the earnings call
What Was Gap's Outlook in Q1 2026?
Gap Inc. raised its full-year fiscal 2026 adjusted diluted EPS outlook to approximately $2.30 to $2.40 (from $2.20 to $2.35 previously). On a reported GAAP basis, full-year diluted EPS is expected to be approximately $2.83 to $2.93. Full-year net sales growth is now expected at 1% to 2% year-over-year (previously 2% to 3%). Gross margin is expected to be flat to up slightly year-over-year. Adjusted operating margin is expected at about 7.3% to 7.5%. The effective tax rate is now expected at approximately 25% (down from 27%), and net interest income is expected at approximately $25 million (up from $10-15 million). Capital expenditures are expected at approximately $650 million. The updated tariff assumptions reflect a 10% rate under Section 122 through July 24, 2026, expected to result in approximately $80 million of net tariff relief. For Q2 fiscal 2026, the company expects net sales flat to down 1% year-over-year, gross margin flat to down 50 basis points, and operating expense deleverage of approximately 110 to 120 basis points.
GAP YoY Financials
| Metric | Q1 2026 | Q1 2025 | Year over year |
|---|---|---|---|
| Revenue | $3.5B | $3.5B | +1.0% |
| Gross Profit | $1.4B | $1.4B | −2.1% |
| Operating Income | $445.0M | $260.0M | +71.2% |
| Net Income | $339.0M | $193.0M | +75.7% |
GAP Revenue by Segment
GAP Revenue by Geography
Figures from SEC filings and company reports. Not investment advice.