- Company name
- Gap Inc.
- Sector
- Apparel retail
- About
- Gap Inc. is the largest specialty apparel company in the United States. Its brands are Old Navy, Gap, Banana Republic and Athleta. It sells through its own stores, online and through franchise partners, and it had nearly 3,500 store locations in about 35 countries at August 1, 2026, of which 2,471 were company-operated. Online sales were 35% of net sales in Q2 fiscal 2026. Old Navy is the largest brand, with net sales of $2.1 billion in Q2 fiscal 2026. Net sales were $15.4 billion in fiscal 2025, which ended on January 31, 2026. Richard Dickson has been CEO since 2023.
- Thesis
- The market prices Gap for the risk that its turnaround stalls at Old Navy and Athleta, and for the cost of tariffs. In Q2 fiscal 2026, total comparable sales fell 1%, the first fall after nine quarters of growth. Old Navy comparable sales fell 4% because of weaker traffic and a weak women's assortment, and Athleta fell 12%. Only the Gap brand grew fast, with comparable sales up 10%. Substantially all of its products come from factories outside North America, mainly in Vietnam and Indonesia, so US tariffs raise its costs, and the tariff rules change often. Old Navy also gets a new CEO in November 2026. For the gap to close, three things must be true. Old Navy comparable sales must improve in the second half of fiscal 2026, as the full-year outlook assumes. Gap must reach its fiscal 2026 outlook of an adjusted operating margin of about 7.4% to 7.6% and adjusted EPS of about $2.35 to $2.45. Athleta must stop its sales decline. The Q3 fiscal 2026 report, estimated for about November 27, 2026, gives the next test, and the holiday season is the main test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a weaker consumer, which would slow the recovery at Old Navy.
- Risks
- Old Navy is more than half of net sales. Its comparable sales fell 4% in Q2 fiscal 2026 because of weaker traffic, and a new CEO starts in November 2026. A longer decline at Old Navy would lower total profits.
In fiscal 2025, about 27% of its purchases came from Vietnam and about 21% from Indonesia, so tariffs raise its costs. Tariff rates changed several times in 2026, and the timing of the expected IEEPA refunds is not certain.
Athleta comparable sales fell 12% in Q2 fiscal 2026 after a fall of 9% a year earlier. The brand can need more investment or more markdowns before it recovers.
Apparel demand depends on consumer spending, weather and fashion trends. Higher energy prices or a weak job market can reduce spending on clothes.
- Balance sheet
- Cash: $2.5B
Debt: $1.5B
Net cash: $985M
Last debt due: 2031
Gap has more cash than debt. At August 1, 2026, cash and cash equivalents were $2.10 billion and short-term investments were $382 million, a total of $2.49 billion. Long-term debt was $1.5 billion of senior notes: $750 million at 3.625% due October 2029 and $750 million at 3.875% due October 2031. Gap also has a $2.2 billion asset-based revolving credit facility, which it extended to July 2031 in July 2026. There were no borrowings under it at August 1, 2026. Operating cash flow was $550 million in the first half of fiscal 2026, and free cash flow was $261 million. Gap returned $726 million to shareholders in the first half through buybacks and dividends, and $399 million remained under its buyback authorization. Lease liabilities for its stores are large, at about $4.2 billion.
As of 2026-08-01.
- Checkpoints
- Nov 27, 2026 (estimate): Q3 fiscal 2026 results: Old Navy trend. Pending. Watch: Net sales growth within the 1.5% to 2.5% outlook and better Old Navy comparable sales than in Q2 pass; another fall at Old Navy or a lower full-year outlook fails.
Mar 2027 (estimate): Fiscal 2026 results and fiscal 2027 outlook. Pending. Watch: Adjusted EPS within the $2.35 to $2.45 outlook and a fiscal 2027 outlook for sales and margin growth pass; lower EPS or an outlook for falling sales fails.
- Recent events
- 2026-09-15: Gap appointed Kirsten Green to its board of directors.
2026-08-27: Gap reported Q2 fiscal 2026 results. Net sales fell 2% to $3.7 billion, and comparable sales fell 1%: Old Navy fell 4%, Gap rose 10%, Banana Republic rose 3% and Athleta fell 12%. Net income was $501 million, including a net benefit of $417 million from expected refunds of IEEPA tariffs. Without it, adjusted EPS was $0.52. Gap lowered its sales outlook to growth of 1% to 1.5% and raised its adjusted EPS outlook to about $2.35 to $2.45. It also said that Michael Francis will succeed Haio Barbeito as President and CEO of Old Navy on November 2, 2026.
2026-07-17: Gap extended its $2.2 billion asset-based revolving credit facility, which was due in July 2027, to July 2031.
2026-05-28: Gap reported Q1 fiscal 2026 results. Net sales rose 1% to $3.5 billion and comparable sales rose 2%, the ninth quarter of growth in a row. It returned $464 million to shareholders and raised its full-year EPS outlook.
2026-03-05: Gap reported fiscal 2025 results. Net sales grew 2% to $15.4 billion, comparable sales rose 3% and operating income was $1.1 billion, a margin of 7.3%. Operating cash flow was $1.3 billion. The board approved a new $1 billion share repurchase authorization.