Key Takeaways:
- Gap lowered its full-year revenue growth forecast to 1%-2% from 2%-3%.
- The retailer cited slower-than-expected growth at its Old Navy brand.
- Shares fell 14.4% after the Q1 earnings miss and guidance cut.
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Gap cuts sales outlook to 1%-2% as Old Navy growth slows
Gap Inc. cut its full-year revenue growth forecast to 1% to 2%, blaming slower momentum at its Old Navy brand that dragged first-quarter sales below analyst estimates.
"The slower-than-expected growth at Old Navy is the primary factor behind our revised outlook," the company said in its earnings statement, without providing further detail on the brand's performance.
The San Francisco-based apparel retailer previously expected revenue to increase 2% to 3% in fiscal 2026. The revised guidance implies roughly $200 million to $400 million in lost revenue at the midpoint of the prior range. Gap reported first-quarter sales that missed consensus estimates, though the company did not disclose specific quarterly revenue or earnings-per-share figures in its preliminary release.
Shares fell 14.4% in trading following the announcement, wiping out roughly $1.5 billion in market value based on the company's prior closing price. The decline pushed the stock to its lowest level since November 2025, testing support near $18.50.
Old Navy, Gap's largest brand by revenue, has been a key driver of the company's turnaround strategy under Chief Executive Officer Richard Dickson, who joined in 2023 from Mattel. The brand's deceleration raises questions about consumer spending on discretionary apparel, particularly among value-conscious shoppers who have been a bright spot for the broader retail sector. Rival retailers including American Eagle Outfitters and Abercrombie & Fitch have also flagged cautious consumer behavior in recent weeks.
The guidance cut comes as Gap works to stabilize market share in a competitive value-apparel segment where discount chains such as TJX Cos. and Ross Stores have gained traction. Investors will watch Gap's full quarterly filing, expected in the coming weeks, for same-store sales data and margin details that could clarify whether the Old Navy slowdown is company-specific or reflects broader industry headwinds.
This article is for informational purposes only and does not constitute investment advice.
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