Gap Surpasses Earnings Expectations, Sends Stock Up 13%
On August 28, 2026, Gap (NYSE: GAP) stock surged over 13% after the company reported better-than-expected earnings for Q2. The clothing retailer exceeded analyst expectations with a pro forma profit of $0.52 per share on sales that matched forecasts at $3.7 billion. However, year-over-year revenue declined by 2%, and same-store sales fell slightly. Despite these challenges, Gap's gross profit margin improved significantly due largely to refunds from Trump-era tariffs—1,140 basis points of the gain were attributed solely to this factor. When excluding tariff refunds, the improvement was minimal at under 20 basis points. GAAP earnings for the quarter came in much higher at $1.38 per share. Looking ahead, Gap anticipates sales growth by year-end and expects both gross and operating profit margins to rise. The company forecasts pro forma profits of between $2.35 and $2.45 per share before adding tariff refunds, which could push earnings well above analysts' expectations.
Topics: financial_results retail stock_movement