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Gap kept its annual forecasts intact after beating Wall Street expectations for first-quarter sales on Thursday as more customers shopped for its Old Navy and namesake brands following a style refresh over the past few quarters.
Under CEO Richard Dickson, the company has stabilised sales by implementing initiatives such as remodelling of Gap stores and bringing in trendy clothing.
Gap has taken steps including partnerships with actor Parker Posey of the White Lotus TV series and Disney collaborations. The company also launched sports apparel line StudioSmooth under the Old Navy brand and featured more vivid prints and silk clothing at its Banana Republic banner.
Comparable sales at Old Navy rose 3 percent, while at Gap banner it increased 5 percent.
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The results come at a time when most retailers including Walmart and Target have struck a cautious tone due to the impact of US President Donald Trump’s tariffs on global trading partners.
Most companies have either withdrawn, cut or stuck to their annual expectations while the global economic environment remains volatile with a US trade court blocking most of Trump’s tariffs on Wednesday and an appeals court reinstating them a day later.
Gap, which bought less than 10 percent of its merchandise, by dollar value, from factories in China in fiscal 2024, said it expects incremental costs of about $250 million to $300 million but has strategies to mitigate more than half of that amount.
It retained its fiscal 2025 sales forecast of 1 percent to 2 percent growth and operating income growth of 8 percent to 10 percent. Gap said the forecast does not reflect the potential effect of tariffs.
The company’s first-quarter revenue rose 2.2 percent to $3.46 billion, compared with analysts’ average estimates of $3.42 billion, according to data compiled by LSEG.
It reported a profit of 51 cents per share. Analysts were expecting earnings of 45 cents.
By Ananya Mariam Rajesh; Editing by Shounak Dasgupta
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With the new GapStudio line, creative director Zac Posen is introducing an edgier, fashion-forward perspective and a platform for monetising his designs on the red carpet, such as Gap’s latest custom outfit for Timothée Chalamet.
