Gap Inc. reported mixed results for the second quarter 2026, where adjusted earnings surpassed expectations despite a modest top-line miss. While the namesake Gap brand continued its resurgence with double-digit growth, the company's largest banner, Old Navy, struggled with seasonal assortment issues and a slowdown in store traffic. Management raised full-year earnings guidance while slightly narrowing the revenue outlook to reflect current retail volatility.
Key Highlights
- Adjusted diluted EPS of $0.52 exceeded the $0.50 consensus, excluding a $417 million net benefit from IEEPA tariff recoveries.
- Gap brand comparable sales surged 10%, driven by strong performance in destination categories such as denim, fleece, and baby products.
- Old Navy comparable sales declined 4% to $2.1 billion, missing internal expectations due to women's seasonal assortment pressure and unanticipated traffic slowdowns.
- Full-year 2026 adjusted EPS guidance was raised to a range of $2.35 to $2.45, up from the prior $2.30 to $2.40 range, despite narrowing the sales growth ceiling to 1.5%.