MW Gap and American Eagle stock are both getting crushed, and neither retailer is blaming the economy

By Steve Goldstein

Old Navy's women dresses were poorly received, according to executives at parent company Gap.

For two retailers that both saw their stock slide by a double-digit percentage after earnings, what may be most surprising is that executives at both Gap and American Eagle Outfitters say nothing is wrong with the economy.

"From what we can see today, the consumer remains resilient, and while we continue to monitor their behavior, at this time, our outlook does not assume any meaningful shift over the balance of the year," Gap CFO Katrina O'Connell told analysts late on Thursday, according to a FactSet-compiled transcript. "The promotional environment thus far has remained rational, yet we are keeping a close watch on the extent to which companies may reinvest this year's tariff upside into pricing actions."

"We think the economy, the U.S. economy, is very strong and we think it's only going to get better as time goes on," said American Eagle Outfitters CEO Jay Schottenstein. "We think with gas prices hopefully will start settling down very shortly, and with the current affairs hopefully will come to some type of finish, hopefully it will be a very good finish for the world. And so we're very optimistic on that."

So what went wrong? At the Gap, it was the Old Navy division, and specifically, women's dresses.

"Bluntly, we have not had the right fashion and value equation for that category," said Gap CEO Richard Dickson. He repeated the wrong-on-fashion,right-on-economy message when asked by an analyst about Old Navy: "Look, on Old Navy, we are not seeing this as a consumer issue."

Gap also said it's had trouble clearing out merchandise at athletics apparel brand Athleta, where same-store sales tumbled 11%.

An American Eagle - known for denim - women's bottoms underperformed. "We saw softer trends in women's bottoms, including denim along with pressure on seasonal categories during a colder spring," said Schottenstein.

Gap shares $(GAP)$ tumbled 15% as the retailer said revenue will grow 1% to 2% this year, down 1 percentage point from its previous forecast.

American Eagle shares $(AEO)$ fell 11%.

-Steve Goldstein

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May 29, 2026 04:58 ET (08:58 GMT)

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