Barclays analyst Adrienne Yih noted that Gap's brands, particularly Old Navy and Banana Republic, are engaging in sustained promotional activities that may hinder profitability. The downgrade reflects concerns over the competitive apparel market and sluggish sales, with Old Navy reporting only 1% same-store sales growth in the first quarter of 2026.
Barclays has reduced its price target for Gap shares from $26 to $20, indicating a potential 7% decline from the stock's recent closing price. Despite some strength in Gap's flagship brand, the overall outlook remains challenging due to a lack of innovation in denim trends and the crowded retail landscape.
Currently, 12 out of 21 analysts maintain a buy or strong buy rating on Gap, contrasting with Barclays' cautious stance