Gap, Inc. (GAP) experienced a sharp pre-market plunge of 15.56% on Friday. The significant drop followed the apparel retailer's release of its first-quarter financial results and a downward revision to its full-year sales outlook.

The company reported Q1 revenue of $3.50 billion, missing the analyst consensus estimate of $3.52 billion. More critically, Gap cut its fiscal 2026 net sales growth forecast to a range of 1% to 2%, down from its prior outlook of 2% to 3% growth. Management cited underperformance at its largest brand, Old Navy, which accounts for approximately 57% of total sales, as a key factor. CEO Richard Dickson stated that Old Navy's seasonal women's dress category failed to resonate with customers, with the weakness persisting into the current quarter.

Furthermore, the company highlighted pressure from budget-strained American consumers who are pulling back on discretionary spending amid macroeconomic uncertainty. While Gap raised its full-year adjusted earnings per share forecast, citing an expected $80 million benefit from tariff relief, investors focused on the concerning sales trajectory. The guidance revision prompted several Wall Street firms, including Barclays and JP Morgan, to cut their price targets and ratings on the stock.