Gap Inc. reported Q1 revenue of $3.5 billion (up 1%) and strong Gap brand comps (10%), but Old Navy’s dress, swim and shorts lines underperformed, limiting $2 billion sales growth to 1%. The company cut Q2 sales outlook to flat-down 1% and trimmed full-year revenue growth to 1-2%, sending shares down 16%.
Gap Inc. posted Q1 revenue of $3.5 billion, up 1% year over year, with adjusted EPS of $0.38, slightly above the $0.37 estimate. Comparable sales rose 2%, while gross margin reached 40.5%, exceeding the company outlook.
Performance diverged across brands: Gap comps rose 10% driven by denim and fleece, Banana Republic climbed 2%, Old Navy sales grew 1% to $2 billion but saw weakness in women’s dress, swim and shorts categories, and Athleta fell 11% as its turnaround continues.
The company now expects Q2 net sales to be flat to down 1% and full-year revenue growth of 1–2%, raising adjusted EPS guidance to $2.30–$2.40. Management plans to roll out beauty in all Old Navy stores, launch Old Navy Sport format and a Fanatics partnership, and focus on sharper price points and messaging.
