Gap Inc.'s stock experienced a sharp after-hours plunge of 13.00% on Thursday. The significant drop occurred following the release of the company's quarterly financial results and updated guidance.

The apparel retailer reported first-quarter revenue of $3.50 billion, which missed the consensus estimate of $3.52 billion. Comparable sales increased by 2% year-over-year, falling short of the anticipated 3.06% growth. Furthermore, the company provided a weaker-than-expected outlook, forecasting second-quarter net sales to be flat to down 1% compared to analyst expectations for a 2.12% increase. For the full fiscal year, Gap now expects net sales growth of 1% to 2%, down from its prior forecast of 2% to 3% and below the estimated 2.45% growth.

The company attributed the softened sales guidance to pressure from budget-strained American consumers who are pulling back on discretionary spending amid macroeconomic uncertainty. While Gap raised its full-year adjusted earnings per share forecast, citing an expected $80 million benefit from tariff relief, the market reaction focused on the concerning sales trajectory and the challenging consumer environment.