The Gap, Inc. GAP is expected to register top-line growth when it reports first-quarter fiscal 2026 results on May 28, after the closing bell. For revenues, the Zacks Consensus Estimate is pegged at $3.5 billion, indicating a 1.8% rise from the year-ago quarter’s figure.
The consensus estimate for the bottom line is pegged at 39 cents per share, indicating a 23.5% decline from the year-ago quarter’s figure. The consensus estimate for fiscal first-quarter earnings has been stable in the past 30 days.
The San Francisco, CA-based company has a trailing four-quarter earnings surprise of 6.6%, on average. In the last reported quarter, the company’s earnings delivered an in-line surprise.
Factors Likely to Impact Gap’s Q1 Results
Gap’s quarterly results are expected to benefit from its ability to gain market share and revive its positioning. The company remains committed to creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda and efficiently controlling expenses. It is increasing investments in technology, RFID and supply-chain capabilities as part of this effort. Its reinvigoration playbook continued to drive brand relevance and consumer engagement.
The company continues to benefit from strong brand performance and rising market share across its largest banners, supported by consistent progress on its brand reinvigoration strategy. Management remains focused on its four strategic priorities, including driving financial and operational rigor, reinvigorating its brands, reinforcing its operating platform and supply chain, and energizing its internal culture. The company is advancing aggressive cost-management efforts, tighter inventory discipline, structural simplification, and improving speed and quality of decision-making.
Gap’s strategy is centered on improving product assortments, marketing, storytelling and store execution across its brands. Consistent execution and stronger brand relevance have helped drive positive comparable sales growth for a while. Accessories are another major opportunity, with the company aiming to build stronger businesses in handbags, jewelry and related categories. Gains from these actions are expected to have bolstered the company’s top-line performance in first-quarter fiscal 2026.
For the first quarter of fiscal 2026, the company had expected net sales to increase in the range of 1-2% year over year. It had anticipated gross margin to decline roughly 150-200 basis points from the prior-year level due to an estimated 200-basis-point tariff headwind. It had forecast adjusted operating expenses to be about 35% of net sales. We expect sales to rise 2.9%, 2.4% and 1.5%, respectively, for Gap, Old Navy, Banana Republic brands for the fiscal first quarter. Our model anticipates comparable sales rise of 2.5% for the quarter under review.
However, Gap continues to operate in a dynamic macroeconomic environment shaped by inflationary pressures, shifting consumer sentiment and ongoing global uncertainties. Tariff-related pressures remain a notable concern for the company, continuing to weigh on profitability. In addition, the company is witnessing sluggishness across its Athleta brand, which remains a significant pressure within its brand portfolio. We expect sales to decline 2.2% year over year in the quarter under review.
The Gap, Inc. Price and EPS Surprise
The Gap, Inc. price-eps-surprise | The Gap, Inc. Quote
What the Zacks Model Unveils for GAP?
Our proven model does not conclusively predict an earnings beat for Gap this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Gap currently has an Earnings ESP of 0.00% and a Zacks Rank of 3.
Valuation Picture of GAP Stock
Going by the price/earnings ratio, the stock is currently trading at 4.35 on a forward 12-month basis, lower than 12.74 for the Retail - Apparel and Shoes industry. Also, it is trading lower than its median of 4.68.
The recent market movements show that Gap’s shares have lost 6.3% in the past six months compared with the industry's 3.1% growth.
Stocks Poised to Beat Earnings Estimates
Here are some companies, which according to our model, have the right combination of elements to post an earnings beat:
Casey's General Stores CASY currently has an Earnings ESP of +1.02% and a Zacks Rank of 2. You can see see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Casey's fourth-quarter fiscal 2026 EPS has moved up 4.2% in the past 30 days to $3.44, which implies 30.8% growth year over year. The consensus estimate for the quarterly revenues is pinned at $4.33 billion, which indicates 8.4% growth from the figure reported in the prior-year quarter. CASY delivered a trailing four-quarter earnings surprise of 20%, on average.
Dollar General Corporation DG currently has an Earnings ESP of +0.50% and a Zacks Rank of 3. The company is likely to register growth in the top and bottom lines when it reports first-quarter fiscal 2026 results.
The consensus mark for DG’s quarterly revenues is pegged at $10.8 billion, which indicates a 3.8% rise from the figure reported in the prior-year quarter. The consensus mark for Dollar General’s quarterly earnings has moved down a penny in the past seven days to $1.89 per share. The consensus estimate suggests a rise of 6.2% from the year-ago quarter’s actual. DG has an average trailing four-quarter earnings surprise of 24.8%.
lululemon athletica inc. LULU currently has an Earnings ESP of +0.47% and a Zacks Rank of 3. The company is likely to register top-line growth when it reports first-quarter fiscal 2026 numbers. The consensus estimate for LULU’s quarterly revenues is pinned at $2.44 billion, indicating a rise of 2.8% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for LULU’s quarterly earnings per share has been stable in the past 30 days at $1.69, indicating a decrease of 35% year over year. LULU has a trailing four-quarter earnings surprise of 7.9%, on average.
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Dollar General Corporation (DG): Free Stock Analysis Report
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The Gap, Inc. (GAP): Free Stock Analysis Report
Casey's General Stores, Inc. (CASY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).