Gap reported second-quarter adjusted EPS above expectations and raised its full-year outlook. Sales were broadly in line with estimates, while the stock surged in after-hours trading.
Gap reported second-quarter adjusted earnings per share (EPS) of $0.52, beating analysts’ estimate of $0.49 by $0.03. Sales were $3.7 billion, in line with market expectations, but down 2% year on year.
The company raised its full-year adjusted EPS outlook from $2.30–$2.40 to $2.35–$2.45, putting the midpoint at $2.40, above the previous midpoint. Second-quarter same-store sales fell 1%, while the Gap brand rose 10% and Old Navy declined 4%.
Adjusted operating margin reached 7.1%, exceeding market expectations despite slightly weaker sales. Adjusted gross margin was 41.4%, driven by an expansion in merchandise margin.
For fiscal 2026, the company lowered its full-year outlook for net sales growth to 1–1.5%, while expecting an adjusted operating margin of 7.4–7.6%, maintaining or exceeding the previous midpoint of 7.5%. Shareholder returns are continuing, and cash and equivalents remain at a high level.