Gap Stock Surges After Beating Earnings Estimates
The Gap (GAP) stock surged over 13% in early trading after the company reported second-quarter earnings that exceeded analyst expectations. While sales met forecasts at $3.7 billion, they declined slightly year-over-year by 2%. The company's pro forma profit came to $0.52 per share compared to an expected $0.49. Despite modest results as described by CEO Richard Dickson, the stock rallied due in part to a significant improvement in gross profit margin — largely attributed to refunds from Trump-era tariffs. When excluding these one-time gains, the actual margin growth was minimal at under 20 basis points. However, GAAP earnings were much higher at $1.38 per share. Looking ahead, Gap anticipates sales will return to growth by late 2026 and forecasts a rise in gross profit margins leading to pro forma profits of between $2.35 and $2.45 per share before adding tariff refunds.
Tickers: $GAP