GAP stock price plummeted 8%, despite Q4 earnings meeting expectations but guidance remaining weak

LootboxPhobia · 2026-03-05T22:16:54+00:00

GAP's Q4 performance met expectations, but the FY2026 guidance was disappointing, leading to an 8% drop in stock price. Adjusted earnings per share were $0.45, with revenue up 2% year-over-year. The company expects gross margin decline and tariff impacts, with FY2026 EPS guidance below expectations. The GAP brand performed strongly, while other brands experienced mixed growth.

LootboxPhobia

2026-03-05 22:16:54

Abstract generation in progress

San Francisco - GAP (NYSE:GAP) reported its fourth-quarter results in line with analyst expectations, but shares fell 8% due to the company’s guidance for fiscal 2026 disappointing investors and concerns over tariff resistance.

The apparel retailer posted adjusted earnings of $0.45 per share for the quarter, matching analyst consensus. Revenue was $4.24 billion, also in line with expectations, up 2% year-over-year. Same-store sales increased by 3%, marking the eighth consecutive quarter of positive comparable sales growth.

For fiscal 2026, GAP expects adjusted earnings per share between $2.20 and $2.35, with a midpoint of $2.28, below last year’s $2.13. The company projects full-year net sales growth of 2% to 3%. It also anticipates a gross margin decline of approximately 150 to 200 basis points in the first quarter, including an estimated 200 basis point impact from tariffs.

President and CEO Richard Dickson stated, “I am pleased to report that GAP achieved a successful fourth quarter, marking another significant year of progress. Our strategic execution is driving sustained performance, with two consecutive years of revenue growth and the eighth straight quarter of positive comparable sales.”

The company’s GAP brand performed particularly well in the fourth quarter, with comparable sales up 7% and revenue increasing 8% to $1.1 billion. Old Navy’s comparable sales grew by 3%, while Banana Republic’s increased by 4%. Athleta underperformed, with a 10% decline in comparable sales.

GAP’s gross margin for the fourth quarter fell 80 basis points to 38.1%, with merchandise profit margin down 90 basis points, mainly due to a net tariff impact of about 200 basis points.

For fiscal 2025, the company reported $1.3 billion in operating cash flow and announced a new $1 billion share repurchase authorization.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.