Pedestrians within the snow at Occasions Sq. throughout a winter storm in New York, US, on Sunday, Feb. 22, 2026.
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Historic winter storms and subsequent retailer closures weighed on Hole’s efficiency throughout its vacation quarter and contributed to worse-than-expected outcomes at its portfolio of manufacturers, the retailer stated Thursday.
Chilly climate, snow and ice all through a lot of the U.S. in January led to about 800 non permanent retailer closures on the storms’ peak, contributing to a miss on comparable gross sales for Previous Navy and combined companywide outcomes, the retailer stated.
“Previous Navy and all of the manufacturers had been truly trending higher heading into that climate disruption,” stated finance chief Katrina O’Connell. “The excellent news is the traits recovered instantly after these storms handed.”
Throughout the enterprise, which incorporates Previous Navy, Banana Republic, Athleta and Hole’s namesake banner, the retailer reported combined fiscal fourth quarter outcomes – lacking expectations on the underside line and assembly consensus on income.
This is how the retailer did in contrast with what Wall Road was anticipating, based mostly on a survey of analysts by LSEG:
- Earnings per share: 45 cents vs. 46 cents anticipated
- Income: $4.24 billion vs. $4.24 billion anticipated
Hole’s inventory fell as a lot as 9% in prolonged buying and selling Thursday.
The corporate’s reported web earnings for the three-month interval that ended Jan. 31 was $171 million, or 45 cents per share, in contrast with $206 million, or 54 cents per share, a yr earlier. Through the quarter, Hole’s gross margin was weighed down by tariffs and fell to 38.1%, barely worse than analysts anticipated, in accordance with StreetAccount.
Gross sales rose to $4.24 billion, up about 2% in comparison with $4.15 billion a yr earlier.
Hole’s steering was largely in step with expectations, however did not exceed consensus. For the present quarter, it is anticipating income to rise between 1% and a pair of%, in comparison with expectations of two%, in accordance with LSEG.
For the complete yr, the corporate is anticipating gross sales to develop between 2% and three%, in step with expectations of two.5% development, in accordance with LSEG. Given a $313 million constructive authorized settlement Hole noticed in the course of the present quarter, it issued an adjusted full-year earnings per share outlook. The corporate stated its anticipating adjusted earnings per share to be between $2.20 and $2.35, in comparison with expectations of $2.32, in accordance with LSEG.
Hole didn’t issue latest adjustments to tariffs into its outlook as a result of the corporate believes it is “untimely to plan for a change” because the state of affairs continues to evolve, stated O’Connell. Given how a lot of a success Hole took from President Donald Trump’s world tariffs, which had been struck down by the U.S. Supreme Courtroom final month, Hole may difficulty stronger steering within the coming quarter as a result of the newly enacted 15% tariff is barely under the earlier charges for a lot of international locations.
“If the [current] Part 122 tariffs had been to remain in place for the yr or expire in July, it ought to result in a extra favorable consequence versus the outlook we supplied at the moment,” stated O’Connell. “If 15% had been the speed that may keep in place for the stability of the yr, that price is barely under the present IEEPA charges which might be contemplated in our plans, so that might give us a modest profit to working earnings if that situation had been to play out.”
Hole’s uneven outcomes come simply over two years into CEO Richard Dickson’s turnaround plan and analysts start to anticipate extra from the attire large. Now that the corporate has improved profitability, returned to development and amassed a staggering $3 billion money pile, Dickson stated he is prepared to show to the following part of the plan, which is about “constructing momentum.”
“Our main focus goes to be on rising our core attire enterprise, and we’ll do that via steady enchancment,” stated Dickson. “This has all been pushed by disciplined execution, which we have to proceed to do with higher product, higher advertising and marketing and higher storytelling and that is not straightforward, however we’re proving that that muscle is getting stronger and stronger now.”
Within the meantime, Hole can be turning its sights on development alternatives for the corporate, together with its enlargement into magnificence and equipment and its style and leisure platform via the latest appointment of a chief leisure officer. He stated the ventures will start to essentially scale subsequent yr.
This is a more in-depth take a look at how every model carried out:
Previous Navy
Hole’s largest and most vital model noticed gross sales rise 3% to $2.3 billion, with comparable gross sales additionally up 3%, nicely under analyst consensus of 4.3%, in accordance with StreetAccount. Regardless of the miss, Hole stated Previous Navy’s “worth worth equation is resonating with shoppers” and it is persevering with to win over consumers throughout a variety of earnings ranges.
Hole
The brightest spot of Hole’s quarter got here from its namesake banner, which noticed gross sales rise 8% to $1.1 billion with comparable gross sales up 7%, far forward of expectations of 4.6%, in accordance with StreetAccount. Below Dickson, the model has labored to regain its cultural relevance and is profitable over a variety of generations, together with youthful, Gen Z consumers.
Banana Republic
The safari-chic workwear model posted its third straight quarter of constructive comparable gross sales, which had been up 4%, beating expectations of two.5%. Gross sales rose 1% to $549 million, reflecting progress in each advertising and marketing and product assortment. “Males’s simply continues to construct momentum. Key gadgets just like the traveler pant, our cashmere program, actually unbelievable outerwear that is been driving the efficiency, significantly within the quarter,” stated Dickson. “Ladies’s efficiency is changing into rather more constant. We have had power in denim skirts and sweaters and as we enter 2026, Banana is admittedly beginning to discover its momentum.”
Athleta
The athleisure model noticed one other quarter of sagging gross sales, with income down 11% to $354 million and comparable gross sales down 10%. In some methods, the drop displays an total sluggish athletic attire market, however the firm has additionally had a variety of strategic missteps, together with concentrating on the unsuitable buyer and providing merchandise that did not land. Below the model’s new CEO, Dickson stated Athleta has been engaged on revamping the assortment, bringing again buyer favorites and dialing up innovation.