Gap shares jumped on Friday after the company reported better-than-expected earnings and raised its full-year outlook. The retailer also announced new leadership for its struggling Old Navy division. The stock rose 14% during the day.
Gap reported earnings of 52 cents per share for the fiscal second quarter, not counting tariff refund benefits. This beat analyst expectations of 48 cents. Revenue dropped 2% from last year to $3.65 billion, just under the consensus estimate of $3.69 billion.
Comparable sales fell 1% overall. Old Navy and Athleta were the weakest performers, showing notable declines. In contrast, the main Gap brand saw strong sales growth, and Banana Republic also improved.
For the third quarter, Gap expects revenue between $3.96 billion and $4 billion, which matches analyst expectations. For the full year, the company raised its outlook and now expects earnings of $2.35 to $2.45 per share, with revenue growth of 1% to 1.5%. This would mean revenue of $15.55 billion to $15.63 billion, both higher than previous Wall Street estimates. The company now expects comparable sales for the main Gap brand to grow in the high-single to low-double-digit range this year, which is better than its earlier forecast. Old Navy is still struggling, and the company now predicts its full-year comparable sales will be flat or down 1%, which is lower than its previous outlook for flat to modest growth.
Gap has appointed Michael Francis, who is currently Old Navy’s chief customer officer and head of marketing shared services, as the new president and chief executive of Old Navy. He will take over from the outgoing leader on November 2, 2026. Francis joined Gap in March and has previously worked as an advisor to Walmart and held positions at JCPenney and Target. While positive, investors also appeared to welcome the leadership change at Old Navy, which has been a persistent drag on Gap’s results and, based on the company’s updated outlook, may take additional time to regain momentum. New leadership could help accelerate that turnaround, a factor likely contributing to the stock’s strong reaction.
Even with Friday’s rally, Gap shares are still down for the year. The stock struggled after a disappointing first-quarter report earlier this spring.
