GAP (NYSE:GAP) Shares Gap Down on Disappointing Earnings

Key Points

• Gap shares fell sharply after the company’s earnings update, opening well below the prior close and trading down about 16% as investors reacted negatively to the report.
• The retailer posted EPS of $0.38 versus the $0.39 consensus and revenue of $3.50 billion versus $3.52 billion expected, with year-over-year revenue up just 1%. Gap also guided FY 2026 EPS at 2.30-2.40.
• Despite the stock drop, Gap said it had positive comparable sales for the ninth straight quarter and raised its full-year EPS outlook, but it also lowered sales guidance amid weaker performance at Old Navy and cautious consumer demand.

Shares of The Gap, Inc. (NYSE:GAP - Get Free Report) gapped down prior to trading on Friday following a weaker than expected earnings announcement. The stock had previously closed at $25.00, but opened at $21.35. GAP shares last traded at $20.7850, with a volume of 7,583,467 shares changing hands.

The company reported $0.38 earnings per share for the quarter, missing analysts' consensus estimates of $0.39 by ($0.01). The company had revenue of $3.50 billion for the quarter, compared to analysts' expectations of $3.52 billion. GAP had a net margin of 5.31% and a return on equity of 22.98%. GAP's quarterly revenue was up 1.0% on a year-over-year basis. During the same quarter in the prior year, the firm posted $0.51 earnings per share. GAP has set its FY 2026 guidance at 2.300-2.400 EPS.

GAP Dividend Announcement

The company also recently announced a quarterly dividend, which will be paid on Wednesday, July 29th. Shareholders of record on Wednesday, July 8th will be issued a $0.175 dividend. The ex-dividend date of this dividend is Wednesday, July 8th. This represents a $0.70 dividend on an annualized basis and a yield of 3.3%. GAP's dividend payout ratio is currently 32.56%.

Key GAP News

Here are the key news stories impacting GAP this week:

• Positive Sentiment: Gap reported positive comparable sales for the ninth straight quarter, with net sales up 1% and gross margin of 40.5% topping expectations. The company also raised its full-year EPS outlook, and Goldman Sachs and BTIG both reiterated buy ratings with a $28 price target, suggesting analysts still see upside from current levels. Gap Inc. Reports First Quarter Fiscal 2026 Results, Raises Full Year Earnings Per Share Outlook
• Neutral Sentiment: The company posted adjusted-looking mixed quarter details, with EPS of $0.38 versus $0.39 expected and revenue of $3.50 billion versus $3.52 billion expected, indicating the results were close to forecasts but not strong enough to offset concerns about guidance. Gap Quarterly Earnings Report
• Negative Sentiment: Management lowered full-year sales guidance, citing weaker-than-expected performance at Old Navy and a cautious consumer backdrop. Reuters also noted apparel stocks fell on signs that discretionary spending remains constrained, which is weighing on sentiment around GAP. Reuters: Gap, American Eagle fall as weak apparel demand signals constrained consumer spending

Wall Street Analyst Weigh In

A number of equities research analysts have issued reports on the company. JPMorgan Chase & Co. restated a "neutral" rating and set a $27.00 price target (down from $35.00) on shares of GAP in a research note on Friday. Citigroup increased their price objective on shares of GAP from $25.00 to $27.00 and gave the stock a "neutral" rating in a research note on Friday, March 6th. Telsey Advisory Group raised their price objective on shares of GAP from $32.00 to $34.00 and gave the stock an "outperform" rating in a report on Monday, March 2nd. Weiss Ratings upgraded shares of GAP from a "hold (c+)" rating to a "buy (b-)" rating in a research report on Wednesday, March 25th. Finally, BTIG Research reaffirmed a "buy" rating and set a $28.00 target price on shares of GAP in a report on Friday. Two research analysts have rated the stock with a Strong Buy rating, ten have given a Buy rating and six have issued a Hold rating to the stock. According to MarketBeat, GAP currently has an average rating of "Moderate Buy" and a consensus target price of $28.64.

Insider Buying and Selling at GAP

In related news, major shareholder John J. Fisher sold 300,000 shares of the stock in a transaction dated Wednesday, April 8th. The stock was sold at an average price of $25.40, for a total transaction of $7,620,000.00. Following the completion of the sale, the insider owned 446,781 shares in the company, valued at approximately $11,348,237.40. This trade represents a 40.17% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. Also, insider Eric Kayen Chan sold 13,377 shares of GAP stock in a transaction that occurred on Friday, April 10th. The shares were sold at an average price of $26.18, for a total value of $350,209.86. Following the sale, the insider directly owned 21,967 shares in the company, valued at $575,096.06. This trade represents a 37.85% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Over the last quarter, insiders sold 923,098 shares of company stock valued at $22,648,158. 31.00% of the stock is currently owned by corporate insiders.

Institutional Investors Weigh In On GAP

Institutional investors and hedge funds have recently modified their holdings of the stock. Cullen Frost Bankers Inc. bought a new position in shares of GAP during the 4th quarter valued at about $26,000. Plato Investment Management Ltd purchased a new position in GAP during the 4th quarter valued at approximately $28,000. V Square Quantitative Management LLC bought a new stake in GAP in the 4th quarter worth approximately $31,000. Cornerstone Planning Group LLC bought a new stake in GAP in the 3rd quarter worth approximately $35,000. Finally, EverSource Wealth Advisors LLC raised its holdings in shares of GAP by 177.0% during the 2nd quarter. EverSource Wealth Advisors LLC now owns 7,016 shares of the company's stock worth $153,000 after acquiring an additional 4,483 shares in the last quarter. Institutional investors own 58.81% of the company's stock.

GAP Stock Down 16.3%

The business has a 50-day moving average price of $24.26 and a 200 day moving average price of $25.69. The company has a current ratio of 1.75, a quick ratio of 1.08 and a debt-to-equity ratio of 0.39. The stock has a market capitalization of $7.65 billion, a P/E ratio of 9.72, a P/E/G ratio of 1.39 and a beta of 2.11.

About GAP

Gap Inc is a global specialty retailer renowned for its portfolio of apparel and accessories brands, including Gap, Banana Republic, Old Navy and Athleta. The company designs, sources and markets clothing across a broad price range and style spectrum, catering to men, women and children. Its offerings extend from everyday wardrobe essentials such as denim, tees and outerwear to performance and lifestyle pieces, reflecting each brand's distinct identity and price point.

Founded in San Francisco in 1969 by Donald and Doris Fisher, Gap Inc has grown into one of the world's largest apparel companies.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.