Gap Stock Plummets 18% Despite Strong Q1 Earnings as Tariff Fears Dominate Narrative
Gap Inc. shares cratered 18% to $22.82 despite delivering better-than-expected Q1 results, as investors focused on looming tariff impacts and weak forward guidance. The apparel giant beat estimates with $0.51 EPS and $3.5 billion revenue, but management’s warning about $100-$150 million in tariff costs overshadowed these results.
Old Navy and Gap brands showed 3% and 5% COMP growth respectively, continuing their turnaround stories. However, Athleta’s 8% decline and Banana Republic’s stagnation revealed persistent brand challenges. The company’s flat Q2 sales projection and muted 1-2% full-year growth outlook further dampened market enthusiasm.
This selloff highlights how macro concerns can rapidly eclipse solid fundamentals in retail stocks. The market’s reaction suggests traders are pricing in both direct tariff impacts and broader demand destruction fears across consumer discretionary sectors.