Pedestrians in the snow at Times Square during a winter storm in New York, US, on Sunday, Feb. 22, 2026.
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Historic winter storms and subsequent store closures weighed on Gap’s performance during its holiday quarter and contributed to worse-than-expected results at its portfolio of brands, the retailer said Thursday.
Cold weather, snow and ice throughout much of the U.S. in January led to about 800 temporary store closures at the storms’ peak, contributing to a miss on comparable sales for Old Navy and mixed companywide results, the retailer said.
“Old Navy and all the brands were actually trending better heading into that weather disruption,” said finance chief Katrina O’Connell. “The good news is the trends recovered immediately after those storms passed.”
Across the business, which includes Old Navy, Banana Republic, Athleta and Gap’s namesake banner, the retailer reported mixed fiscal fourth quarter results – missing expectations on the bottom line and meeting consensus on revenue.
Here’s how the retailer did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: 45 cents vs. 46 cents expected
- Revenue: $4.24 billion vs. $4.24 billion expected
Gap’s stock fell as much as 9% in extended trading Thursday.
The company’s reported net income for the three-month period that ended Jan. 31 was $171 million, or 45 cents per share, compared with $206 million, or 54 cents per share, a year earlier. During the quarter, Gap’s gross margin was weighed down by tariffs and fell to 38.1%, slightly worse than analysts expected, according to StreetAccount.
Sales rose to $4.24 billion, up about 2% compared to $4.15 billion a year earlier.
Gap’s guidance was largely in line with expectations, but failed to exceed consensus. For the current quarter, it’s expecting revenue to rise between 1% and 2%, compared to expectations of 2%, according to LSEG.
For the full year, the company is expecting sales to grow between 2% and 3%, in line with expectations of 2.5% growth, according to LSEG. Given a $313 million positive legal settlement Gap saw during the current quarter, it issued an adjusted full-year earnings per share outlook. The company said its expecting adjusted earnings per share to be between $2.20 and $2.35, compared to expectations of $2.32, according to LSEG.
Gap did not factor recent changes to tariffs into its outlook because the company believes it’s “premature to plan for a change” as the situation continues to evolve, said O’Connell. Given how much of a hit Gap took from President Donald Trump’s global tariffs, which were struck down by the U.S. Supreme Court last month, Gap could issue stronger guidance in the coming quarter because the newly enacted 15% tariff is slightly below the previous rates for many countries.
“If the [current] Section 122 tariffs were to stay in place for the year or expire in July, it should lead to a more favorable outcome versus the outlook we provided today,” said O’Connell. “If 15% were the rate that would stay in place for the balance of the year, that rate is slightly below the current IEEPA rates that are contemplated in our plans, so that could give us a modest benefit to operating income if that scenario were to play out.”
Gap’s choppy results come just over two years into CEO Richard Dickson’s turnaround plan and analysts begin to expect more from the apparel giant. Now that the company has improved profitability, returned to growth and amassed a staggering $3 billion cash pile, Dickson said he’s ready to turn to the next phase of the plan, which is about “building momentum.”
“Our primary focus is going to be on growing our core apparel business, and we’re going to do this through continuous improvement,” said Dickson. “This has all been driven by disciplined execution, which we need to continue to do with better product, better marketing and better storytelling and that’s not easy, but we’re proving that that muscle is getting stronger and stronger now.”
In the meantime, Gap is also turning its sights on growth opportunities for the company, including its expansion into beauty and accessories and its fashion and entertainment platform through the recent appointment of a chief entertainment officer. He said the ventures will begin to really scale next year.
Here’s a closer look at how each brand performed:
Old Navy
Gap’s largest and most important brand saw sales rise 3% to $2.3 billion, with comparable sales also up 3%, well below analyst consensus of 4.3%, according to StreetAccount. Despite the miss, Gap said Old Navy’s “price value equation is resonating with consumers” and it’s continuing to win over shoppers across a wide range of income levels.
Gap
The brightest spot of Gap’s quarter came from its namesake banner, which saw sales rise 8% to $1.1 billion with comparable sales up 7%, far ahead of expectations of 4.6%, according to StreetAccount. Under Dickson, the brand has worked to regain its cultural relevance and is winning over a wide range of generations, including younger, Gen Z shoppers.
Banana Republic
The safari-chic workwear brand posted its third straight quarter of positive comparable sales, which were up 4%, beating expectations of 2.5%. Sales rose 1% to $549 million, reflecting progress in both marketing and product assortment. “Men’s just continues to build momentum. Key items like the traveler pant, our cashmere program, really fantastic outerwear that’s been driving the performance, particularly in the quarter,” said Dickson. “Women’s performance is becoming much more consistent. We’ve had strength in denim skirts and sweaters and as we enter 2026, Banana is really starting to find its momentum.”
Athleta
The athleisure brand saw another quarter of sagging sales, with revenue down 11% to $354 million and comparable sales down 10%. In some ways, the drop reflects an overall sluggish athletic apparel market, but the company has also had a number of strategic missteps, including targeting the wrong customer and offering products that failed to land. Under the brand’s new CEO, Dickson said Athleta has been working on revamping the assortment, bringing back customer favorites and dialing up innovation.
Source: https://www.cnbc.com/2026/03/05/gap-gap-q4-2025-earnings.html
