The Gap’s Stock Dips On Light Sales And Tariff Warning

Shares of Gap Inc. (GAP) are down 2% after the clothing retailer announced soft sales for the year’s second quarter and warned that tariffs will impact its profits moving forward.

The San Francisco-based company reported earnings per share (EPS) of $0.57 U.S., which was ahead of the $0.55 U.S. expected among analysts.

However, revenue of $3.73 billion U.S. just missed forecasts that called for $3.74 billion U.S. Additionally, comparable sales rose 1%, weaker than the 1.9% expected among analysts.

Management at Gap said tariffs are likely to cost the company between $150 million U.S. and $175 million U.S. this year. That forecast has been raised from $100 million U.S. to $150 million U.S. previously.

The company also said that its full-year operating margin will be between 6.7% and 7%, down from 7.4% in the previous fiscal year, reflecting the impact of tariffs.

To offset tariffs, Gap says it is working with suppliers, adjusting its sourcing, diversifying its supply chain, and making targeted price increases.

During Q2, the company’s Gap, Banana Republic and Old Navy business segments each saw comparable sales rise, while the Athleta brand saw comparable sales decline 9%.

In July of this year, Gap announced that Maggie Gauger, a veteran of Nike (NKE), has been hired as Athleta’s new CEO, the third top executive to run the brand in the past two years.

Beyond tariff impacts, the Gap reaffirmed its fiscal 2025 sales outlook and said it continues to expect revenue to grow between 1% and 2%, in line with Wall Street estimates of 1.6%.

For the current third quarter, Gap is expecting sales to grow between 1.5% and 2.5%, better than the 2% that analysts had forecast.

Before today (Aug. 29), GAP stock had declined 8% this year to trade at $21.68 U.S. per share.