Net sales rose about 2% year-over-year to ~$4.2 billion, supported by +3% comparable sales, marking continued momentum across core brands. Profitability, however, was more mixed: EPS came in at $0.45, down from $0.54 in the prior year (−17% YoY), reflecting margin pressure despite disciplined execution. Gross margin declined roughly 80 basis points YoY to 38.1%, primarily due to tariff-related cost headwinds, partially offset by lower discounting and improved inventory control.
Old Navy remained steady with +3% comparable sales and +3% revenue growth, continuing to anchor the group with broad-based demand. The Gap brand was the standout, with sales up 8% and comps up ~7%, reflecting successful product resets and improving relevance. Banana Republic delivered modest progress, with +1% sales growth and +4% comps, marking continued traction from its premium repositioning. In contrast, Athleta remained a drag, with sales down 11% and comps down ~10%, highlighting ongoing challenges in the brand reset.
Note: Gap's FY'25 ended on January 31, 2026.
The company expects net sales to increase 2%–3% YoY (implying roughly $15.7–$15.9 billion), with comparable sales remaining positive across core brands. Profitability is projected to improve slightly, with adjusted operating margin of 7.3%–7.5% (vs. 7.3% in FY2025) and gross margin flat to slightly up, reflecting better inventory discipline and pricing, offset by tariff headwinds. On earnings, Gap guided to adjusted EPS of $2.20–$2.35, implying mid-single-digit growth y-o-y from $2.13 in FY2025.
Management also flagged a softer start to the year, with Q1 margins expected to decline due to tariff impacts, but sees full-year pressures largely mitigated.
Gap is a global specialty retailer offering clothing, accessories, and personal care products for men, women, and children. It markets its products under the Gap, Old Navy, Banana Republic, Athleta, GapKids, babyGap, and Intermix brands.
Gap Inc. operates four distinct brands targeting different customer segments: Old Navy, which focuses on value-driven, fashion-conscious families; Gap, aimed at young adults seeking casual, modern essentials; Banana Republic, positioned toward more affluent and relatively older customers with a premium aesthetic; and Athleta, which caters to active, wellness-focused women with an emphasis on performance and lifestyle apparel.
Below are key drivers of Gap Inc.'s value that present opportunities for upside or downside to the current Trefis price estimate:
For additional details, select a division from the interactive Trefis split for Gap Inc. at the top of the page.
Old Navy is the single largest contributor to Gap Inc.'s valuation, driven by scale and mass market positioning.
Old Navy benefits from a broad demographic reach and price competitiveness, allowing it to capture a significant share in the value apparel category.
Recent focus on inventory discipline and reduced promotions has supported gross margin recovery, which is critical for overall profitability.
The company's integrated store and digital platform support convenience and customer retention, enhancing long term revenue stability.
Macroeconomic pressure on discretionary spending continues to impact apparel demand, particularly among lower-income consumers, affecting traffic and conversion rates.
Gap Inc. is prioritizing cost control, supply chain efficiency, and inventory optimization to protect margins amid volatile demand.
The company is sharpening its focus on core brands and reducing complexity, aiming to drive a clearer brand identity and improved execution.
