Gap (GAP) Q2 2026 Earnings Call Transcript

Senior Director of Investor Relations - Shirley Martin

Chief Executive Officer - Richard Dickson

Executive Vice President and Chief Financial Officer - Katrina O'Connell

Operator: Good afternoon, ladies and gentlemen. I would like to welcome everyone to the Gap Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to introduce your host, Shirley Martin, Senior Director of Investor Relations.

Shirley Martin: Good afternoon, everyone. Welcome to Gap Inc.'s Second Quarter Fiscal 2026 Earnings Conference Call. Before we begin, I'd like to remind you that the information made available on this conference call contains forward-looking statements that are subject to risks that could cause our actual results to be materially different. For information on factors that could cause our actual results to differ materially from any forward-looking statements, please refer to the cautionary statements contained in our latest earnings release. The risk factors described in the company's annual report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2026, and other filings with the Securities and Exchange Commission, all of which are available on gapinc.com.

These forward-looking statements are based on information as of today, August 27, 2026, and we assume no obligation to publicly update or revise our forward-looking statements. Our latest earnings release and the accompanying materials available on gapinc.com also include descriptions and where available reconciliations of financial measures not consistent with generally accepted accounting principles. All market data referenced today will be from Circana's U.S. apparel consumer service for the 12 months ending July 2026, unless otherwise stated. Joining me on the call today are our Chief Executive Officer, Richard Dickson; and Chief Financial Officer, Katrina O'Connell. With that, I'll turn the call over to Richard.

Richard Dickson: Thanks, Shirley, and good afternoon, everyone. In the second quarter, while the company exceeded our profit expectations, we delivered a net sales decline of 2% with mixed performance on the top line across the portfolio. While not the revenue outcome we wanted, continued operational and financial rigor contributed to gross margin strength. We also maintained market share, reflecting the continued resonance of our brand portfolio. The Gap brand delivered another exceptional quarter with comparable sales increasing 10% and Banana Republic continued to build momentum, posting its fifth consecutive quarter of positive comps. Athleta's top line remained pressured, though we saw encouraging improvements in inventory productivity.