Gap Shares Jump 13% on Strong Q2 Earnings Beat

Shares of apparel retailer The Gap (NYSE: GAP) jumped 13% by mid‑morning on Friday, after the company’s earnings report topped analyst expectations.

Analysts had projected a $0.49 per‑share profit on $3.7 billion in revenue for the quarter. Gap delivered on sales and exceeded the earnings estimate, posting a pro‑forma profit of $0.52 per share.

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Gap Q2 earnings

However, the results were not uniformly positive. Although revenue matched forecasts, it fell 2% year‑over‑year, with same‑store sales dipping 1%. CEO Richard Dickson described the performance as “modestly below expectations” despite the market’s upbeat reaction.

Gap noted that its gross profit margin expanded by 1,160 basis points, though tariff refunds contributed roughly 1,140 of those points. Excluding the tariff refunds, the margin improvement was less than 20 basis points—still positive, but modest.

Importantly, the reported $0.52 per‑share profit excluded tariff refunds. When those refunds are included—consistent with GAAP reporting—Gap’s quarterly earnings rise to $1.38 per share, almost three times the headline figure.

What’s next for Gap stock?

Looking ahead, Gap expects a return to sales growth, projecting a 1% to 1.5% increase in revenue by the end of 2026.

The company also foresees higher gross and operating margins, which should drive earnings of $2.35 to $2.45 per share before tariff refunds. Including those refunds, Gap is positioned to surpass the consensus estimate of $2.72 per share for the full year.

Each further earnings beat is likely to boost the stock price even higher.

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