1Q26 Earnings Review

Research evidence excerpt

1Q26 Earnings Review

May 28, 2026 Gap, Inc.

(GAP, Buy, $28 PT)

Robert Drbul

1Q26 Earnings Review (332) 400-5186 rdrbul@btig.comCONSUMER Jake Katsikas WHAT YOU SHOULD KNOW: (212) 738-6162 jkatsikas@btig.com

■ 1Q26 Earnings… Gap reported 1Q26 adjusted EPS of $0.38 (vs. BTIGe $0.36), on Company Data

net sales of $3.5 billion (+1% y/y, in-line with our est.) and comps of +2% (vs. BTIGe

Closing Price $25.00RETAIL +3.2%). Gross margin of 40.5% declined 130 bps y/y, reflecting an approximate 200

bps tariff headwind, though underlying merchandise margins expanded on better Price Target $28.00

inventory management and lower discounting. We expect further GM contraction Market Cap (M) $9,450.00

into 2Q, with an inflection back to expansion in 2H26. Adjusted operating margin Enterprise Value (M) $8,451.00

was 5.2%, down 230 bps y/y, with SG&A deleveraging to 35.3% of sales on the Shares Out (M) 378.00EQUITY

timing of investments. Inventory was flat y/y with units down, reflecting tighter Avg Daily Vol-3 Months (M) 8.15

control across the business.

Dividend / Yield $0.66 / 2.6%

■ Brand trends showed a clear divergence, with Gap brand driving results while Revisions

Old Navy lagged. Gap delivered comps of +10%, one of its strongest performances

in over two decades and well above our +6% estimate, with broad-based strength Previous Current

Rating Buy BuyRESEARCH across women’s, men’s, and kids, supported by strong product and brand relevance.

We expect this strong momentum to continue throughout the year. Old Navy comps Price Target $28.00 $28.00

rose +1%, below our estimate of +3%, with strength in denim, active, and kids FY26E REV 15,589.00 15,598.00

and baby offset by weaker seasonal categories. Banana Republic comps increased FY27E REV 15,998.00 16,088.00

+2% (vs.