By Erik Holm

Gap investors may be in for a tough day tomorrow.

Shares fell roughly 14% in after-hours trading after the apparel retailer cut its full-year revenue outlook and reported slowing sales for its Old Navy chain. The apparel retailer said Thursday it now expects revenue to increase 1% to 2% this year, down from its prior outlook of 2% to 3% growth.

In total, first quarter sales rose 1% to $3.5 billion, slightly less than the $3.52 billion that analysts surveyed by FactSet expected.

Old Navy is by far the largest of the four brands under the Gap umbrella, so the stumble there is a big contributor to the selloff. Same-store sales, which exclude newly opened or closed stores, grew 1% in the period that ended May 2, down from 3% growth in the year-earlier period.

Chief Executive Richard Dickson told investors on Thursday that the problem centered around the women's business, particularly dresses. He said the underperformance has continued into the current quarter but that Old Navy is taking steps to address the problems by sharpening its prices and marketing messages.

He said that after those changes took hold in mid-May, the business showed some improvement.

Athleta, the company's much smaller athletic-apparel brand, continued its trajectory of falling sales. Same-store sales there fell 11%, down from an 8% decline the year before. Athleta is contending with intense competition from newer brands such as Alo Yoga and Vuori.

But there were bright spots. Same-store sales at its namesake Gap brand grew 10% year over year, on top of 5% growth last year. And the company raised its outlook for full-year adjusted earnings per share to $2.30 to $2.40, up from $2.20 to $2.35.

The stock had been on a run of late: It gained for seven straight trading days ahead of Thursday afternoon's earnings, rising 21% in that span.

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(END) Dow Jones Newswires

May 28, 2026 17:36 ET (21:36 GMT)

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