Key facts
- Gap raised its annual profit forecast, citing sustained momentum at its namesake brand.
- The namesake brand achieved a 10% comparable sales increase in the second quarter.
- Old Navy comparable sales decreased by 4% and Athleta's by 12% in the second quarter.
- The company increased its adjusted annual earnings per share forecast by 5 cents to a range of $2.35 to $2.45.
- Gap now anticipates fiscal 2026 sales growth between 1% and 1.5%.
- Second-quarter revenue was $3.65 billion, a 2% decrease, while adjusted profit per share was 52 cents, exceeding expectations.
Apparel retailer Gap has raised its annual profit forecast, signaling confidence in the sustained momentum of its namesake brand. This optimism comes despite ongoing challenges at some of its other labels, including Old Navy and Athleta.
Under CEO Richard Dickson, Gap has been implementing turnaround strategies focused on current trends and expanded marketing to enhance brand relevance amid cautious consumer spending. The company's namesake brand has been a key driver of this effort, achieving a 10% comparable sales increase in the second quarter, marking its tenth consecutive quarter of positive performance. This exceeded analyst expectations of an 8.8% rise.
In contrast, Old Navy experienced a 4% decline in comparable sales, and Athleta saw a 12% decrease. Dickson acknowledged the need for improvement at Old Navy, stating that targeted actions are already being taken.
Gap now projects adjusted annual earnings per share between $2.35 and $2.45, an increase of 5 cents at both ends. This forecast excludes certain tariff refunds and related interest income. The company also revised its fiscal 2026 sales growth outlook to 1% to 1.5%, down slightly from its previous forecast of 1% to 2%.
For the second quarter ended August 1, Gap reported a 2% decrease in revenue to $3.65 billion, falling short of the approximately $3.69 billion estimated by analysts. However, adjusted profit per share of 52 cents surpassed the expected 48 cents.