Gap’s first quarter results for 2026 were met with a significant negative market reaction, as revenue came in below Wall Street’s expectations despite flat year-over-year sales. Management attributed the quarter’s mixed performance to uneven results across brands, with standout growth at Gap and continued challenges at Old Navy, particularly in seasonal categories like women’s dresses. CEO Richard Dickson acknowledged that “results at the brand level were more varied, reflecting both the different stages of their transformation and some brand specific dynamics.”
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Gap (GAP) Q1 CY2026 Highlights:
- Revenue: $3.50 billion vs analyst estimates of $3.53 billion (flat year on year, 0.8% miss)
- Adjusted EPS: $0.38 vs analyst estimates of $0.38 (in line)
- Management raised its full-year Adjusted EPS guidance to $2.35 at the midpoint, a 3.3% increase
- Operating Margin: 12.7%, up from 7.5% in the same quarter last year
- Locations: 3,477 at quarter end, down from 3,505 in the same quarter last year
- Same-Store Sales rose 2% year on year, in line with the same quarter last year
- Market Capitalization: $7.63 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Gap’s Q1 Earnings Call
- Matthew Boss (JPMorgan): Asked about the timeline for Old Navy’s assortment correction and Gap’s sales momentum. CEO Richard Dickson emphasized ongoing improvements and confidence in category strength for the second half.
- Dana Telsey (Telsey Group): Questioned whether Old Navy’s issues were macro-driven or internal. Dickson clarified the challenges were internal, particularly with seasonal assortment, not consumer demand.
- Brooke Roach (Goldman Sachs): Sought insight into what led to the seasonal product missteps at Old Navy and how processes are changing. Dickson acknowledged the miss in fashion and value equation and described steps being taken to address it.
- Adrienne Yih-Tennant (Barclays): Inquired about the size and strategy for seasonal categories and the rollout of beauty at Old Navy. Dickson described the focus on core categories and a measured approach to beauty expansion.
- Mark Altschwager (Baird): Asked about the use of tariff relief and margin assumptions. CFO Katrina O’Connell explained that margin flexibility is reserved to buffer fuel costs and potential promotional activity, with no immediate plans for further pricing changes.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team is closely monitoring (1) the effectiveness of Old Navy’s assortment adjustments and the impact on seasonal category performance, (2) the expansion and consumer adoption of new beauty and accessories offerings, and (3) margin preservation through tariff mitigation and disciplined cost management. Progress on technology-driven initiatives and brand collaborations will also be key markers to watch.
Gap currently trades at $21.10, down from $25 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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