Gap Inc. Q1 Sales Up 1%, Gross Margin Exceeds Outlook at 40.5%
GAP•Gap Inc. posted 1% revenue growth to $3.5 billion and 2% comparable sales in Q1 fiscal 2026, its ninth consecutive positive quarter, with gross margin at 40.5% beating outlook. It returned $464 million to shareholders via buybacks and dividends and raised its full-year EPS outlook.
1. Q1 Financial Results
Gap Inc. delivered net sales of $3.5 billion, up 1% year-over-year, and comparable sales rose 2%, marking its ninth straight quarter of positive comps. Gross margin reached 40.5%, a 130 basis-point decline from last year but above expectations, and the company raised its full-year earnings per share outlook.
2. Brand Performance
The Gap brand led with a 10% comparable sales increase, its strongest performance in over two decades. Old Navy comps rose 1%, Banana Republic gained 2%, and Athleta comps declined 11%, reflecting varying transformation stages across the portfolio.
3. Cash Position and Shareholder Returns
Ending cash, cash equivalents and short-term investments totaled $2.6 billion, up 15% year-over-year, while operating cash flow was $213 million and free cash flow $78 million. The company returned $464 million to shareholders through a $200 million accelerated share repurchase, $201 million in open-market buybacks and $63 million in dividends.
4. Outlook and Strategic Priorities
Management emphasized continued market share gains, core business improvement and growth accelerators across the brand portfolio. The board approved a second-quarter dividend of $0.175 per share, and $599 million remains under the existing repurchase authorization.
