Gap Inc. Q2 2026 Earnings Press Release - Financial Results and Shareholder Returns

Oct 22, 2026

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Gap Inc. reported second-quarter fiscal 2026 results for the quarter ended August 1, 2026, with net sales down 2% year over year and comparable sales down 1%. The company exceeded reported and adjusted operating margin expectations, citing gross margin strength and momentum at the Gap brand, while detailing performance at Old Navy. Operating income was $676 million, with adjusted operating income of $259 million. The company also reported balance sheet and cash flow highlights and returned $726 million to shareholders year-to-date through share repurchases and dividends, while providing an updated full-year outlook and raised earnings per share guidance.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages17

Reading Time43 min

AccessFree to download

Second Quarter Fiscal 2026 Results

Financial Results

Balance Sheet and Cash Flow Highlights

Shareholder Returns

Global Brand Results

Gap Inc. Reports Second Quarter Fiscal 2026 Results Net sales down 2% compared to last year; comparable sales down 1% Exceeded reported and adjusted operating margin expectations Returned $726 million to shareholders through share repurchases and dividends year-to-date Provides updated outlook for full year while raising earnings per share outlook Company separately announces Michael Francis as Old Navy's next President and CEO, succeeding Haio Barbeito SAN FRANCISCO – August 27, 2026 – Gap Inc. (NYSE: GAP), the largest specialty apparel company in the U.S. with a purpose-driven house of iconic brands including Old Navy, Gap, Banana Republic, and Athleta, today reported financial results for its second quarter ended August 1, 2026 . “While top-line results in the second quarter were modestly below expectations, continued operational and financial rigor contributed to gross margin strength resulting in the Company exceeding profit expectations,” said President and Chief Executive Officer, Richard Dickson. “We are particularly proud of the momentum at the Gap brand, which posted another quarter of double-digit comparable sales. We have work to do at Old Navy, but we have a clear understanding of the factors that impacted performance and are taking targeted actions that are already driving improved results. We remain focused on disciplined execution and performing while we transform in order to win in the second half,” Dickson continued. Second Quarter Fiscal 2026 – Financial Results • Net sales of $3 .7 billion were down 2% compared to last year. Comparable sales were down 1% . • Store sales decreased 3% compared to last year. The Company ended the quarter with nearly 3,500 store locations in about 35 countries, of which 2,471 were Company-operated. • Online sales decreased 1% compared to last year and represented 35% of total net sales. • Gross margin of 52 .8% increased 1,160 basis points versus last year on a reported basis including 1,1401 basis points of net benefit related to the expected recovery of tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") (the "net 1 Represents the impact of IEEPA tariff refunds of approximately $512 million, partially offset by a commitment of appreciation of approximately $95 million for certain vendors. IEEPA tariff recovery") . Adjusted gross margin excluding this benefit was 41.4% and increased 20 basis points versus last year. • Merchandise margin increased 1,220 basis points versus last year on a reported basis. Adjusted for the net IEEPA tariff recovery, merchandise margin increased 80 basis points including the benefit from tariff mitigation strategies with the underlying expansion primarily driven by strength at the Gap brand, partially offset by higher promotional activity at Old Navy. Average unit retail increased across all brands. • Rent, occupancy, and depreciation ("ROD") as a percent of sales deleveraged 60 basis points versus last year. • Operating expense was $1 .3 billion or 34.3% of net sales. • Operating income was $676 million and operating margin was 18.5% . • Adjusted operating income was $259 million and adjusted operating margin was 7. 1%, excluding the net IEEPA tariff recovery. • The effective tax rate was 26.3% and adjusted effective tax rate was 26.4%, which excludes the tax impact of the net IEEPA tariff recovery and related interest income. • Net income was $501 million and diluted earnings per share were $1.38 . • Adjusted net income was $190 million and adjusted diluted earnings per share were $0.52, excluding the net IEEPA tariff recovery and related interest income. • Diluted weighted average shares were 362 million. Balance Sheet and Cash Flow Highlights • Ended the quarter with cash, cash equivalents and short-term investments of $2.5 billion, an increase of 2% from the prior year. • Year-to-date net cash from operating activities was $550 million. Free cash flow, defined as

FAQs

How did Gap Inc.'s net sales and comparable sales change in Q2 fiscal 2026?

Net sales were $3.7 billion, down 2% versus the prior year, and comparable sales decreased 1%.

What were Gap Inc.'s operating income and adjusted operating income in Q2 fiscal 2026?

Operating income was $676 million with an operating margin of 18.5%. Adjusted operating income was $259 million, with adjusted operating margin of 7.1% excluding the net IEEPA tariff recovery.

How much has Gap Inc. returned to shareholders and through what mechanisms?

Gap Inc. returned $726 million to shareholders year-to-date, including $125 million in dividends and $601 million in share repurchases, and it also returned $262 million during the second quarter.

Oct 22, 2026

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