GAP Stock Heads For Best Day In 16 Months, But Old Navy’s Prospects Divide Wall Street

Comparable sales of Old Navy, Gap’s largest clothing brand, fell 4% due to weaker demand for women’s seasonal clothing.

• BofA remains concerned that Old Navy’s lower-end customers will continue to be pressured by the challenging macro environment.
• BTIG says Old Navy weakness was largely driven by execution issues that the company appears to be addressing.
• Gap appointed former Target executive Michael Francis as Old Navy’s President and CEO.

Shares of Gap (GAP) surged 15% on Friday after the apparel retailer reported better-than-expected second-quarter earnings and raised its full-year profit forecast, although Old Navy’s weak performance left Wall Street divided over whether the company’s largest brand can stage a turnaround.

GAP stock climbed above the crucial 200-day moving average (200-DMA) for the first time in three months.

GAP’s Q2 Performance

Gap reported second-quarter (Q2) revenue of $3.65 billion, down 2% from a year earlier and below Wall Street’s $3.69 billion estimate, according to Fiscal.ai. Comparable sales declined 1%.

However, adjusted earnings of $0.52 per share exceeded the $0.48 consensus estimate. Gap raised its fiscal 2026 adjusted earnings guidance to $2.35 to $2.45 per share from $2.30 to $2.40 per share, while narrowing its revenue growth outlook to 1% to 1.5% from 1% to 2%.

The namesake Gap brand remained the bright spot, recording 10% comparable-sales growth

Gap’s Biggest Brand Reports Weak Quarter

Comparable sales of Old Navy, Gap’s ‘affordable’ clothing brand, fell 4% as weaker demand for women’s seasonal clothing and a larger-than-expected slowdown in customer traffic. Old Navy makes up roughly 57% of Gap’s overall business.

The firm appointed Michael Francis as Old Navy’s President and CEO, effective November 2. The retail veteran previously held senior roles at Target, JCPenney and DreamWorks.

Bank of America raised GAP’s price target to $27 from $26 but remained concerned that Old Navy’s lower-income customers will continue to face pressure from a challenging macro environment.

Morgan Stanley lifted its target to $23 from $21, calling the quarter “better than feared,” but said it wants more evidence that Old Navy can return to growth in the second half.

BTIG Sees Signs Of Improvement

However, other firms appeared more bullish on Old Navy’s prospects. BTIG raised its target to $27 and maintained a ‘Buy’ rating. It said Old Navy’s weakness largely reflected execution problems that management appears to be addressing.

Wells Fargo increased its target to $23 from $22, noting that Old Navy’s “expected demise” did not materialize, and said the bottom line is that investors had prepared for a miss but instead received raised guidance.

Retail Turns Extremely Bullish

Despite the slump in the share price, retail sentiment surrounding GAP on Stocktwits turned ‘extremely bullish’ from ‘bullish’ over the past 24 hours, amid a 1,500% surge in message volumes.

One user called Gap’s comparable-store sales jump “super hot.” The namesake brand’s comparable sales grew 10%, while Old Navy’s dropped 4%.

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The stock is down 7.5% so far in 2026.

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