On August 26, Gap, Inc rose 5.71% in regular trading, reaching $21.315 per share with turnover of $116 million, as the apparel retail sector saw broad strength ahead of the company's fiscal Q2 earnings report scheduled for August 27 after market close.

The rally comes amid a significant sector tailwind, with peer Abercrombie & Fitch surging 41.17% on the same session. Gap is expected to report fiscal Q2 adjusted EPS of $0.50. UBS previously noted a balanced upside/downside skew around the earnings, highlighting potential downside from Old Navy comparable store sales declining more than the consensus estimate of 2%, partly due to ongoing recovery from Q1 seasonal underperformance and weaker-than-expected World Cup inventory sales. On the upside, UBS flagged potential gross margin benefits if tariff policy changes implemented after July allow the company to release financial reserves set aside for tariff-related costs.

The stock had faced headwinds in recent months following downgrades from Jefferies, Barclays, and Morgan Stanley, and a 16% post-earnings decline in late May after Old Navy weakness prompted a sales guidance cut.

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