Gap stock is plummeting this morning in early trading after the company reported its fourth-quarter results after the bell yesterday. As of this writing, shares of Gap Inc. (NYSE: GAP) are down more than 12%, and its recent temporary store closures are partly to blame for that. Here’s what you need to know.
Gap’s Q4 2025 results
The iconic retail chain turns 56 this year, and during its long life, it has seen its fair share of ups and downs. The company’s name-brand Gap stores were an iconic mall staple in the 80s and 90s, but in the early 21st century, the brand faced growing competition from online rivals and shifting brand loyalties among Gen Z—something the company has been working to address in recent years.
In addition to its name-brand stores, The Gap also owns the athleisure brand Athleta, the safari-themed brand Banana Republic, and the value brand Old Navy.
In its earnings report yesterday, The Gap reported the following for its fourth quarter, which ended January 31, 2026:
- Net sales: $4.2 billion (up 2% year over year)
- Net income: $171 million
- Diluted earnings per share (EPS): $0.45
Unfortunately for the company, these results were either in line with or below expectations. As noted by CNBC, The Gap’s revenue of $4.2 billion matched analyst expectations. However, its diluted EPS of 45 cents was one cent below the 46 cents analysts were expecting.
Gap further broke out its comparable sales for the fourth quarter across its brands. When it came to comparable sales, the company’s namesake brand, Gap, performed best. Gap saw comparable sales rise 7% versus the same period a year earlier. Banana Republic saw a 4% increase, and Old Navy saw a 3% increase. However, the company’s Athleta brand suffered a huge drop—its comparable sales were down 10% from the same quarter a year earlier.
800 temporary store closures hit The Gap’s bottom line
The Gap’s retail stores are facing many of the same pressures as most physical apparel stores: more price-conscious consumers, prominent online threats from Amazon, Shein, and Temu, and high tariff costs for the quarter. (President Trump’s “Liberation Day tarrifs were not declared illegal by the Supreme Court until February, meaning they were in effect for Gap’s entire Q4.)
However, the company also said that its temporary store closures hurt its bottom line. Mainly due to severe winter weather in the northeast in January, The Gap was forced to temporarily close as many as 800 of its stores, which had a negative impact on comparable sales.
“Old Navy and all the brands were actually trending better heading into that weather disruption,” said the Gap’s chief financial officer, Katrina O’Connell (via CNBC). “The good news is the trends recovered immediately after those storms passed.”
Investors will not be interested in whether store closures by other retail companies operating in the northeast also had as negative an impact on bottom lines as the closures of The Gap’s brands did.
A tariff boost in Gap’s future?
After reporting its lackluster results and issuing guidance that was already largely in line with investor expectations (fiscal 2026 net sales growth of between 2% and 3%), Gap’s shares fell. Currenlty GAP shares are down more than 13% to $23.59.
Year-to-date the company’s share price is now in the red, down about 4.3%. However, over the past 12 months, the company’s share price is still up about 25%.
Gap may also have a saving grace in the cards. President Trump’s tariffs being declared void by the Supreme Court means the company is currently paying much less on import duties. Trump has recently enacted new tariffs of up to 15%, but that threshold is less than what The Gap was paying.
As CNBC reported, Gap’s O’Connell said the company did not factor these tariff price changes into its future guidance yet, as it believed it was “premature to plan for a change.”
However, O’Connell noted that “If the [current] Section 122 tariffs were to stay in place for the year or expire in July, it should lead to a more favorable outcome versus the outlook we provided today.”
That’s something investors will be hoping for.
