Gap Targets Beauty Launch by Year-End with Tariff Tailwind and Extended Comps Streak
GAP•Gap achieved its ninth straight positive comp quarter, with Old Navy up 1% and Gap brand marking ten consecutive quarters of gains while Athleta undergoes a rebuild. The company will launch beauty products across Old Navy by year-end and anticipates a tariff-related tailwind in H2.
1. Q1 Comparable Sales Performance
Gap reported its ninth consecutive positive comparable sales quarter, led by Old Navy’s 1% comp increase on top of last year’s 3% growth and Gap brand’s tenth straight quarterly gain, while Athleta remains in a rebuilding phase with targeted actions to strengthen its assortment.
2. Beauty Category Initiative
The company is expanding into beauty and accessories, planning to introduce a curated mix of third-party and owned beauty brands across the entire Old Navy fleet by year-end, positioning the category as a potential long-term revenue contributor.
3. Full-Year Outlook and Strategic Actions
Management has adopted a moderated view on full-year results but expects sequential improvement in the second half driven by strategic category news, partnerships and expedited assortment adjustments, particularly in seasonal categories like dresses.
4. Tariff Cushion and Margin Impact
Gap’s pricing actions have built a promotional cushion against potential tariff hikes; the assumed return to IEEPA rates was included in the original outlook, turning tariffs into a net tailwind for margins in H2 after mitigation measures.
