Gap Shares Rise on Stronger Profit Outlook Despite Lower Sales Forecast
Gap Inc.'s stock surged nearly 15% following its second-quarter fiscal 2026 results, driven by a raised full-year earnings per share (EPS) outlook despite weaker-than-expected revenue and a trimmed sales forecast. The company reported adjusted diluted EPS of $0.52, exceeding expectations, while Q2 revenue came in at $3.65 billion, below the analyst consensus. Gap's flagship brand saw 10% comparable sales growth for its eleventh consecutive quarter, but Old Navy underperformed with a 4% decline in both net and comp sales. Abercrombie & Fitch also gained ground on strong brand momentum and one-time tariff refunds, while Kohl’s reported modest gains from similar benefits. The retail sector ETF (XRT) rose slightly as mall-based apparel stocks outperformed the broader market. Gap's CEO attributed its profit beat to margin discipline but acknowledged challenges at Old Navy due to marketing issues and seasonal product weaknesses. The company announced a leadership change, with Michael Francis set to take over as president of Old Navy in November 2026, signaling targeted actions for improvement.
Topics: Abercrombie & Fitch Gap Kohl's stock performance tariff refunds