On May 29, Gap fell 15.2% overnight, trading at $21.2/share, with trading volume of $424.0. The decline was triggered by the company's latest quarterly earnings report, in which its largest brand Old Navy missed first-quarter sales expectations, prompting management to lower full-year revenue guidance.

Old Navy accounts for nearly 60% of Gap's total revenue, making any weakness at the brand a significant drag on the entire company. CEO Richard Dickson stated that Old Navy's spring/summer collection failed to resonate with consumers, resulting in below-expectation sales performance. He added that the slowdown has extended into the current quarter, leading the company to take a more cautious full-year outlook. Old Navy is responding by optimizing pricing strategies and marketing messaging. Meanwhile, the smaller athletic brand Athleta continued its sales decline trend. Management also noted during the earnings call that seasonal women's apparel performance in Q2 remains below internal targets.

Multiple institutions had previously held bullish views, expecting Old Navy and Athleta to drive comparable-store sales recovery. The significant gap between actual results and market expectations triggered heavy after-hours selling pressure.

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