Gap trims FY26 sales outlook to 1–2% after mixed Q1 results
GAP•Gap reports Q1 net sales of $3.5bn, up 1% year-on-year, with comps up 2%, led by a 10% gain at the Gap brand while Athleta sales fell 12%. The company cut its full-year 2026 net sales forecast to 1–2% growth from 2–3% after mixed brand results and 130bp margin pressure.
1. Q1 Performance Overview
Gap reported net sales of $3.5bn for the quarter ended May 2, marking a 1% year-on-year increase with comparable sales up 2%. Store sales rose 3% while online revenue declined 2%, representing 38% of total net sales.
2. Brand-by-Brand Results
The Gap brand achieved $796m in first-quarter sales, up 10% with a 10% comparable gain. Banana Republic and Old Navy each saw 1% sales increases, while Athleta sales fell 12% with comps down 11%.
3. Profitability and Margins
Gross margin stood at 40.5%, down 130 basis points year-on-year but above outlook, as merchandise margin declined 100 basis points with a 200bp tariff headwind. Operating income was $445m (12.7% margin), adjusted operating margin 5.2%, and adjusted EPS $0.38.
4. FY26 Outlook Revision
Gap lowered its full-year net sales growth forecast to 1–2% from 2–3%, expects flat to slight gross margin improvement and stable operating expense ratio near 33.5%. CEO Richard Dickson highlighted ninth consecutive quarter of positive comparable sales.
