Gap Inc. said severe winter storms in January forced about 800 temporary store closures at the peak, disrupting holiday-quarter momentum and contributing to weaker-than-expected results across its brand portfolio. The company reported fiscal fourth-quarter revenue of $4.24 billion and GAAP earnings of $0.45 per share for the three months ended Jan. 31, 2026, narrowly missing analysts’ EPS consensus by a penny while meeting revenue expectations. Executives cited the weather disruption as a near-term headwind that interrupted improving trends at Old Navy and other banners, and said sales recovered quickly after conditions eased. Investors reacted swiftly: Gap shares fell as much as 9% in after-hours trading following the report.
- About 800 Gap Inc. stores were temporarily closed at the winter storms’ peak in January, reducing foot traffic and sales during the quarter.
- Gap reported Q4 revenue of $4.24 billion, up roughly 2% from $4.15 billion a year earlier, and GAAP EPS of $0.45 versus $0.46 expected (LSEG consensus).
- Net income for the quarter was $171 million, compared with $206 million in the prior-year period; gross margin declined to 38.1%, pressured in part by tariffs.
- Old Navy sales rose 3% to $2.3 billion with comps up 3%, below the 4.3% StreetAccount consensus; Gap’s namesake brand grew 8% to $1.1 billion with comps up 7%.
- Banana Republic posted its third straight quarter of positive comps (up 4%) with sales of $549 million; Athleta revenue fell 11% to $354 million and comps declined 10%.
- Gap’s guidance calls for near-term revenue growth of 1%–2% for the current quarter and 2%–3% for the full year; adjusted EPS outlook is $2.20–$2.35, versus a $2.32 StreetAccount expectation.
- The company recorded a $313 million positive legal settlement in the quarter and is holding approximately $3 billion in cash, which management says supports the next phase of its turnaround.
Background
January’s extreme winter weather — widespread cold, snow and ice across large swaths of the United States — created short-term closures and transportation disruptions that affected many brick-and-mortar retailers. For Gap Inc., those conditions coincided with a period when Old Navy and other banners were trending positively, amplifying the financial impact of missed shopping days. Weather-related closures are a recurring retail risk, but the scale here—about 800 temporary store closures at the storms’ peak—was notable for a chain of Gap’s size.
Gap’s recent performance must also be seen against the backdrop of a multi-year turnaround led by CEO Richard Dickson, who took the company into a profitability-first phase and rebuilt inventory, marketing and product assortments. Over the last two years the retailer restored growth and amassed roughly $3 billion in cash on the balance sheet, creating optionality for reinvestment and strategic moves. At the same time, shifting tariff rules and a changing macro environment have complicated planning; management said it did not bake recent tariff changes into guidance because the situation remains fluid.
Main Event
For the fiscal fourth quarter ending Jan. 31, Gap reported net income of $171 million, or $0.45 per share, down from $206 million, or $0.54 per share, a year earlier. Revenue increased about 2% year-over-year to $4.24 billion, matching consensus revenue but missing EPS estimates by one cent. Management attributed part of the EPS shortfall to weather-related lost sales and to tariff pressures that compressed gross margin to 38.1% during the quarter.
Old Navy, Gap’s largest brand, produced $2.3 billion in sales, a 3% increase, with comparable sales up 3%—below StreetAccount’s 4.3% expectation. Gap’s namesake brand was the quarter’s strongest performer, with sales rising 8% to $1.1 billion and comps up 7%, outpacing a 4.6% consensus. Banana Republic reported modest progress with $549 million in sales and comps up 4%, its third consecutive quarter of positive comparable sales.
Athleta continued to struggle, with revenue down 11% to $354 million and comparable sales down 10%. Management attributed some of Athleta’s decline to a slower athletic-apparel market and to assortment and positioning missteps that the brand is addressing under new leadership. Executives said they are refreshing Athleta’s assortment and reintroducing customer-favored items to regain momentum.
Gap’s guidance for the coming quarter calls for revenue growth of 1%–2%, slightly below the 2% expectation reported by LSEG, while full-year sales are projected to rise 2%–3% (consensus ~2.5%). The company also reported a $313 million favorable legal settlement in the period and issued an adjusted full-year EPS outlook of $2.20–$2.35, which brackets the $2.32 StreetAccount forecast.
Analysis & Implications
Weather is a well-known transitory shock for retail sales, but its timing during an improving sales trend can materially affect quarterly results and investor sentiment. Gap’s executives stressed that brand momentum, particularly at Old Navy, was building before the storms and that sales recovered quickly once stores reopened. Short-term recovery does not guarantee that every lost sale will be fully recaptured, however, and the market reacted to the EPS miss and margin pressure.
Tariffs remain a complicating factor. Gap said it has not assumed recent tariff adjustments into its guidance because the final policy path is uncertain; management noted that a newly enacted 15% tariff could be modestly favorable versus previously contemplated rates for many sourcing countries. Any permanent change to tariff policy would affect cost planning, margins and the timing of potential upside to operating income.
Operationally, Gap is entering a next phase of execution that relies on stronger product, marketing and storytelling to sustain recovery. The company is also pursuing adjacencies—beauty, accessories and a fashion-entertainment platform—that management expects to scale next year. How quickly those initiatives contribute to earnings will affect investor expectations now that the company has rebuilt profitability and amassed substantial cash.
Comparison & Data
| Metric | Reported | Consensus (LSEG/StreetAccount) |
|---|---|---|
| Revenue (Q4) | $4.24B | $4.24B |
| GAAP EPS (Q4) | $0.45 | $0.46 |
| Net income | $171M | — |
| Gross margin | 38.1% | — |
| Old Navy sales | $2.3B (+3%) | Comps +4.3% |
| Gap brand sales | $1.1B (+8%) | Comps +4.6% |
| Athleta sales | $354M (-11%) | Comps -10% |
The table highlights the narrow EPS miss against otherwise in-line revenue, and the divergent brand performances: strong growth at the Gap banner and Banana Republic, steadier-but-disappointing Old Navy comps, and weakness at Athleta. The $313 million legal settlement and a roughly $3 billion cash balance provide management with flexibility amid these near-term headwinds.
Reactions & Quotes
“Old Navy and all the brands were actually trending better heading into that weather disruption. The good news is the trends recovered immediately after those storms passed.”
Katrina O’Connell, Chief Financial Officer, Gap Inc.
O’Connell framed the storms as an interruption to otherwise improving momentum and emphasized the company’s view that the recovery in sales was prompt once stores reopened. She also noted that management did not include recent tariff shifts in guidance because policy remains unsettled.
“Our primary focus is going to be on growing our core apparel business… through continuous improvement — better product, better marketing and better storytelling.”
Richard Dickson, Chief Executive Officer, Gap Inc.
Dickson positioned the quarter within a broader turnaround narrative: having restored profitability and cash buffers, the company is shifting toward scaling growth initiatives and strengthening brand relevance, particularly among younger shoppers at the Gap banner.
Unconfirmed
- The precise dollar amount of sales lost solely due to the 800 temporary store closures has not been disclosed by Gap and cannot be isolated from other factors affecting Q4 performance.
- Whether the newly enacted 15% tariff will remain in force for the full fiscal year or be altered later is unresolved and could materially change cost outcomes if finalized differently.
- The timeline for scaling Gap’s beauty, accessories and fashion-entertainment initiatives into meaningful revenue contribution remains management guidance rather than a guaranteed outcome.
Bottom Line
Gap’s fiscal Q4 results show a company in transition: revenue growth and a stronger balance sheet coexist with margin pressure from tariffs and a narrow EPS miss driven in part by an unusually severe weather event. Brand-level performance was mixed—Gap and Banana Republic drove positive momentum while Old Navy underperformed relative to consensus and Athleta continued to lag.
Near-term investor focus will center on whether weather-driven disruptions are truly transitory and how tariff developments evolve. If the tariff environment stabilizes favorably and Gap sustains product and marketing improvements, management’s stated plan to build momentum could translate into stronger, more consistent results in the coming quarters.
Sources
- CNBC — coverage of Gap Inc. Q4 results and commentary (news media)
- Gap Inc. Investor Relations (company / official filings and press releases)
- LSEG / StreetAccount consensus data (market data provider)