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yesterday

Gap Lifts Tariff Hit and Trims Margin Outlook as Athleta Weighs on Turnaround

Management is shifting sourcing with selective price moves to blunt tariff costs.

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The Gap logo is seen on the front of the company's store in Paris, France, July 1, 2021. REUTERS/Sarah Meyssonnier

Overview

  • Gap reported Q2 net sales roughly flat at $3.7 billion, comparable sales up 1%, and net income of $216 million.
  • The company raised its expected fiscal 2025 tariff impact to $150 million to $175 million and guided operating margin to about 6.7% to 7%.
  • Athleta was a notable drag with sales down 11% and comps down 9%, while Old Navy, Gap and Banana Republic posted positive comparable sales.
  • Inventory increased about 9% as the company pre-shipped merchandise ahead of higher duties.
  • Shares fell after hours as executives detailed mitigation steps and said they do not expect tariff annualization to further reduce operating income in 2026.