GAP Q2 Earnings Call Highlights

Gap Inc. NYSE: GAP reported second-quarter fiscal 2026 net sales of $3.7 billion, down 2% from a year earlier, while comparable sales declined 1%. The retailer said it exceeded its profit expectations through pricing discipline, inventory management and gross-margin strength, even as performance varied sharply among its brands.

Chief Executive Officer Richard Dickson said Gap’s namesake brand and Banana Republic continued to gain momentum, while Old Navy faced seasonal assortment and traffic challenges and Athleta remained in a turnaround phase. The company narrowed its full-year sales outlook but raised its adjusted operating-margin and earnings-per-share forecasts.

The Gap brand posted a 10% increase in comparable sales and a 9% rise in net sales, marking its 11th consecutive quarter of positive comparable sales growth. Dickson said women’s led the quarter, with solid results in men’s and accelerating sales in kids and baby. Denim and fleece remained key destination categories. Gap also gained market share, according to the company, while its customer file expanded and discounting declined. The retailer cited collaborations and marketing efforts, including a partnership with Hailey Bieber that reimagined two denim silhouettes. Dickson said the Hailey Jean sold out quickly and created a “meaningful halo” across the broader business.

Gap relaunched its fragrance line at the end of the quarter and plans to launch bags during Fashion Week in September as it expands into accessories. The company expects to complete about 35 Gap store remodels this year, bringing roughly one-quarter of its North American specialty fleet into its latest store concept by year-end.

Old Navy, however, reported a 4% decline in both net sales and comparable sales. Dickson said women’s summer seasonal products accounted for about 3 percentage points of the comparable-sales pressure, with dresses, shorts and swim affected by assortment and pricing decisions that weakened the brand’s value proposition. The company also experienced an unexpected slowdown in traffic as the quarter progressed. Dickson said Old Navy’s summer marketing did not generate the traffic management expected, prompting changes to fall marketing and product plans.

“We see value as a perception based on product and pricing,” Dickson said during the question-and-answer session. “When we deliver the right product at the right price, the customer responds.” Old Navy’s fall assortment emphasizes denim, activewear, sweaters and knits, categories management said should become more meaningful as the summer seasonal headwind subsides. The retailer launched a denim campaign featuring Cardi B, which Dickson said was Old Navy’s most-viewed campaign in its history and was helping improve traffic and women’s-denim conversion in August. The brand also part...