NYSE:GPS

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Gap Surges 17% as Profit Beat and Higher EPS Outlook Offset Weak Sales

Gap (NYSE: GAP) shares jumped 17% in premarket trading after the apparel retailer exceeded profit expectations and raised its fiscal 2026 earnings outlook despite weaker second-quarter sales.

Net sales declined 2% to $3.7 billion and comparable sales fell 1%, but adjusted operating margin reached 7.1%, exceeding the company’s expectations. Adjusted EPS was $0.52. Management said disciplined execution and stronger gross margins helped profitability outperform despite softer revenue.

The Gap brand was a major bright spot, with comparable sales surging 10% and revenue rising 9%. However, Old Navy comparable sales fell 4%, while Athleta remained particularly weak with a 12% decline.

Investors appear particularly encouraged by the improved profit outlook. Gap raised adjusted FY26 EPS guidance to approximately $2.35–$2.45 from $2.30–$2.40 and increased its adjusted operating-margin forecast to 7.4%–7.6%. This came even as full-year sales growth guidance was trimmed to 1%–1.5%.

The 17% rally suggests investors are rewarding Gap’s improving profitability, strong momentum at its namesake brand and higher earnings expectations, while looking past continued weakness at Old Navy and Athleta.
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Author
The Investor 08-28-26
THE GAP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7562 94-1697231
(State of incorporation) (Commission File Number) (IRS Employer Identification No.)

Two Folsom Street
San Francisco, California 94105
(Address of principal executive offices) (Zip Code)


(415) 427-0100
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, $0.05 par value GAP The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 8.01 Other Events.

On March 10, 2025, The Gap, Inc. (the "Company") adopted a new form of Restricted Stock Unit Award Agreement under its 2016 Long-Term Incentive Plan (the "Plan"), a new form of Performance Share Agreement under the Plan, and a new form of Director Stock Unit Agreement under the Plan. Copies of these new forms of agreement are attached hereto as Exhibits 10.1, 10.2, and 10.3, respectively.
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