On May 29, Gap fell 16.28% in regular trading, trading at $20.725/share, with trading volume of $146 million. The steep decline followed the company's fiscal Q1 earnings release, which revealed disappointing revenue and a downward revision to its full-year sales outlook.

Gap reported Q1 revenue of $3.50 billion, missing analyst expectations of $3.52 billion. The shortfall was primarily driven by its largest brand, Old Navy, which accounts for nearly 60% of total revenue. CEO Richard Dickson stated that Old Navy's spring/summer collections failed to resonate with consumers, and the weakness has persisted into the current quarter. Additionally, athletic brand Athleta continued its sales decline trend.

The company lowered its fiscal 2026 net sales growth forecast from 2%-3% to 1%-2% year-over-year. For Q2, Gap expects net sales to be flat to down 1%. While adjusted EPS guidance was raised to $2.30-$2.40 versus a prior range of $2.20-$2.35, the revenue miss and weakened sales trajectory triggered broad selling. Multiple Wall Street firms subsequently cut their target prices on the stock, amplifying downward pressure.

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