What Happened to Gap Inc. (GPS) Stock?

Gap Inc.'s stock performance has been a narrative of brand portfolio challenges and strategic recalibrations over the past few years. The company, which owns Old Navy, Gap, Banana Republic, and Athleta, has navigated a dynamic retail landscape marked by shifting consumer preferences, supply chain disruptions, and intense competition.

In the early 2020s, like many retailers, Gap Inc. faced significant headwinds from the COVID-19 pandemic, leading to temporary store closures and a pivot towards digital sales. The company embarked on a strategic overhaul, including streamlining its store footprint and focusing on its core brands. However, consistent performance across its portfolio remained elusive. Old Navy, historically a strong performer, began to show signs of weakness, particularly in seasonal categories, impacting overall sales. Athleta, once a growth engine in the athleisure market, has also struggled to maintain momentum amidst increased competition and has seen its recovery timeline pushed out repeatedly.

A key turning point came with leadership changes. Sonia Syngal, who became CEO in March 2020, resigned in July 2022, with executive chairman Bob Martin stepping in as interim CEO. In July 2023, Richard Dickson, known for his brand revitalization work at Mattel, was appointed President and CEO, signaling a renewed focus on brand relevance and operational discipline. Under Dickson's leadership, the namesake Gap brand has shown a notable resurgence, consistently delivering double-digit comparable sales growth in recent quarters.

As of August 27, 2026, Gap Inc. reported its second quarter fiscal 2026 results. Net sales were $3.7 billion, a 2% decrease compared to the previous year, with comparable sales down 1%. Despite the top-line miss, the company exceeded profit expectations, reporting a diluted EPS of $1.38, significantly higher than analyst estimates, largely due to a substantial $417 million net tariff-recovery adjustment. Excluding this non-recurring item, adjusted diluted EPS was $0.52. The Gap brand's comparable sales grew 10%, while Old Navy's net sales fell 4% and Athleta's declined 12%. In response to Old Navy's continued underperformance, Gap Inc. announced Michael Francis as the new President and CEO of Old Navy, effective November 2, 2026, succeeding Haio Barbeito. The company also raised its full-year adjusted diluted EPS guidance to $2.35–$2.45. Strategically, Gap Inc. is expanding into beauty and accessories, with a phased launch starting at Old Navy in late 2025 and scaling in 2026, and is pursuing international expansion through partnerships.

The stock has shown volatility, with shares down about 17.4% year-to-date as of August 27, 2026, compared to the S&P 500's gain. However, some analysts consider the stock undervalued based on its current P/E ratio relative to historical norms. The company continues to return capital to shareholders through dividends and share repurchases, having returned $726 million year-to-date in fiscal 2026.