MW Gap's sales stall, and retailer puts a number to additional costs due to tariffs

By Claudia Assis

Gap's stock drops after hours following earnings report

Investors late Thursday looked past higher-than-expected sales and profit at Gap Inc. to worry about the retailer's call for flat current-quarter sales and stubborn weakness for the Banana Republic and Athleta brands, with the stock diving more than 16% in the after-hours session.

Gap $(GAP)$ kept its 2025 outlook intact, but said that fiscal second-quarter sales would likely be flat. The retailer reported fiscal first-quarter results broadly above Wall Street expectations.

The Trump administration's tariffs, which are in limbo after a couple of court orders, would result in gross additional costs of about $250 million to $300 million, Gap said.

It has "strategies" in place to mitigate more than half of that amount, the company said, without further details.

After taking the mitigation into account, it sees a remaining net impact of about $100 million to $150 million to its fiscal 2025 operating income, mostly falling on the second half of the year, Gap said.

This is a developing story. It will be updated.

-Claudia Assis

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May 29, 2025 16:41 ET (20:41 GMT)

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