Gap is rising late Thursday, as investors react positively to its upbeat earnings, outlook and a new CEO for its lagging Old Navy division.
Gap said it earned 52 cents a share in the fiscal second quarter, excluding tariff refund benefits, on revenue that fell 2% from the year-ago period to $3.65 billion. Analysts were looking for earnings of 48 cents a share on revenue of $3.69 billion.
Comparable sales were down 1%, with Old Navy and Athleta again the laggards with a 4% and a 12% decline, respectively. Its flagship Gap stores recorded a 10% comparable sales gain while Banana Republic comps were up 3%.
For the third quarter, Gap sees revenue of roughly $3.96 billion to $4 billion, bracketing the $3.98 billion consensus. For the full year, it raised its forecast, guiding for earnings of $2.35 to $2.45 a share on revenue growth of 1% to 1.5%, or $15.55 billion to $15.63 billion. Consensus calls for earnings of $2.32 on revenue of $15.51 billion.
Comparable sales at the Gap brand will be in the high-single to low double-digit range, the company now forecasts, compared with its prior outlook for a high-single-digit gain.
Gap sees some ongoing struggles for Old Navy, as it now says full-year comparable sales to be flat to down 1%, compared with the prior range of flat to up 1%.
However it named Michael Francis, the current Old Navy chief customer officer and head of marketing shared services, as the division's new president and chief executive officer, succeeding Haio Barbeito, effective Nov. 2, 2026. Francis, a previous advisor to Walmart, is a veteran of JCPenney and Target as well, and joined Gap in March.
Shares are up 10% in late Thursday trading.
While the results were upbeat, investors are likely also quite happy to see a change at Old Navy. Gap's biggest division was a drag on the prior quarter as well, and as the comp outlook shows, it may take time to regain its momentum. New leadership can help that process, which helps to explain the stock reaction.
The shares have skidded since the disappointing first quarter this spring, and are down nearly 19% since the start of the year through the close of regular trading.
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