Pedestrians in Times Square in the snow during a winter storm on Sunday, February 22, 2026 in New York, USA.
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Historic winter storms and subsequent store closures weighed on of the gap The retailer announced Thursday that its holiday quarter performance was weak, contributing to weaker-than-expected results for its brand portfolio.
As cold weather, snow and ice hit much of the U.S. in January, about 800 stores temporarily closed at the peak of the storm, missing Old Navy’s comparable sales and causing mixed results across the company, the company said.
“Old Navy and all of our brands were actually trending well heading into the weather disruption,” said finance director Katrina O’Connell. “The good news is that the trend picked up soon after the storm passed.”
Across its businesses, which include Old Navy, Banana Republic, Athleta and Gap’s eponymous banners, the retailer reported mixed fiscal fourth-quarter results. Earnings were below expectations and earnings met consensus.
Here’s how the retailer performed compared to Wall Street expectations, based on a survey of analysts by LSEG.
Earnings per share: 45 cents vs. 46 cents expected Earnings: $4.24 billion vs. $4.24 billion expected
Gap stock fell as much as 9% in extended trading Thursday.
The company reported net income of $171 million, or 45 cents per share, for the three months ended Jan. 31, compared with $206 million, or 54 cents per share, in the same period last year. According to Street accounts, Gap’s gross profit margin during the quarter fell to 38.1%, weighed down by tariffs, slightly worse than analysts expected.
Sales were $4.24 billion, an increase of approximately 2% compared to $4.15 billion in the same period last year.
Gap’s guidance was broadly in line with expectations but fell short of exceeding consensus. LSEG said it expects sales to rise 1-2% in the current quarter, compared with expectations of 2%.
LSEG said the company expects full-year sales to rise 2% to 3%, in line with its forecast for 2.5% growth. Gap announced its full-year adjusted earnings per share outlook in light of the $313 million legal settlement reached during the quarter. The company said it expects adjusted earnings per share of $2.20 to $2.35, compared with expectations of $2.32, according to LSEG.
O’Connell said Gap has not factored recent tariff changes into its outlook because it believes it is “too early to plan for changes” as the situation continues to evolve. Given how badly Gap was hit by President Donald Trump’s global tariffs, which were struck down by the U.S. Supreme Court last month, the newly enacted 15% tariffs are slightly below previous rates in many countries, so Gap could provide stronger guidance next quarter.
“If the (current) Section 122 tariffs were to continue for the rest of the year or expire in July, this should lead to a more favorable outcome than the outlook we have provided today,” O’Connell said. “If 15% is the rate that remains in place for the remainder of the year, that rate is slightly below the current IEEPA rate contemplated in our plans and could provide some benefit to operating income if that scenario materializes.”
Gap’s erratic performance comes just over two years into CEO Richard Dixon’s turnaround plan, and analysts are starting to expect more from the apparel giant. Now that the company has improved its profitability, returned to growth and amassed an impressive $3 billion cash pile, Dixon said it is ready to move on to the next phase of its plan to “build momentum.”
“Our primary focus is on growing our core apparel business, and we intend to achieve this through continuous improvement,” Dixon said. “This has all been driven by disciplined execution, and we need to continually do better products, better marketing, better storytelling, and it’s not easy, but we’re now proving that the power of that is going from strength to strength.”
Meanwhile, Gap is also eyeing growth opportunities for the company, including expansion into beauty and accessories, fashion and entertainment platforms with the recent appointment of a chief entertainment officer. He said the venture will begin to scale in earnest next year.
Let’s take a closer look at each brand’s performance.
old navy
Gap’s largest and most important brand sales rose 3% to $2.3 billion, according to Street Accounts, with comparable sales up 3%, well below the 4.3% consensus from analysts. Despite the setback, Gap said Old Navy’s “price-value equation resonates with consumers” and continues to attract shoppers from a wide range of income levels.
gap
The brightest spot in Gap’s quarter was its eponymous banner, with sales up 8% to $1.1 billion and comparable sales up 7%, well above expectations of 4.6%, according to Street accounts. Under Dixon, the brand is working to regain cultural relevance and appeal to a wide range of generations, including young Gen Z shoppers.
banana republic
The safari-chic workwear brand posted positive comparable sales for the third quarter in a row, up 4%, beating expectations of 2.5%. Sales increased 1% to $549 million, reflecting advances in both marketing and product assortments. “Men’s continues to gain momentum, with key items such as travel pants, cashmere programs and really great outerwear driving performance, particularly this quarter,” Dixon said. “Women’s performance is becoming more consistent. We’ve had strength in denim skirts and sweaters, but as we move into 2026, bananas are really starting to pick up steam.”
Athleta
The athleisure brand had another weak quarter, with sales down 11% to $354 million and like-for-like sales down 10%. In some ways, this decline reflects the overall slump in the sports apparel market, but the company has also made a number of strategic mistakes, including targeting the wrong people and failing to deliver the product. Dixon said that under the brand’s new CEO, Athleta is working to revamp its assortment, bring back customer favorites and increase innovation.
