Gap Stock Falls as Tariff Concerns Weigh on Profits

New York : Gap Inc. shares slipped in extended trading after the retailer posted mixed second-quarter results and warned that rising tariff costs will weigh on profits.

The company behind Old Navy, Banana Republic, Athleta, and Gap said tariffs are now expected to cost between $150 million and $175 million, higher than earlier estimates. As a result, Gap lowered its full-year operating margin outlook to 6.7%–7%, compared with 7.4% last year.

For the quarter ending August 2, Gap reported net income of $216 million (57 cents per share), slightly above analyst expectations. Revenue came in at $3.73 billion, just under Wall Street’s forecast of $3.74 billion. Comparable sales rose 1%, short of the 1.9% gain analysts anticipated.

Performance varied across brands:

• Old Navy sales rose 1% to $2.2 billion.

• Gap banner sales climbed 1% to $772 million.

• Banana Republic sales slipped 1% but outperformed on comps.

• Athleta sales fell 11%, with comparable sales down 9%, dragging overall performance.

CEO Richard Dickson said Athleta remains a key focus, calling 2025 a “reset year” as the brand works to reconnect with its core customer. He added that targeted pricing adjustments and supply chain changes are being made to offset tariffs.

Despite near-term challenges, Gap reaffirmed its 2025 sales growth outlook of 1%–2% and highlighted the success of its “Better in Denim” campaign, which has gained significant traction across TikTok and social media.