Gap shares slide as tariffs loom large over apparel maker's turnaround plans
HighlightsGap Inc. shares fell 20% in early trading after the company warned that U.S. tariffs would impact this year's profit, estimating tariff-related costs between $250 million and $300 million. Under the leadership of Chief Executive Officer Richard Dickson, Gap Inc. plans to double the use of U.S.-grown cotton by 2026 and aims to diversify its supplier footprint to reduce reliance on any single country. Despite the tariff concerns, Gap Inc. reaffirmed its annual forecasts, excluding tariff-related costs, and reported first-quarter sales and profit that exceeded Wall Street estimates.
By Savyata Mishra
Gap
shares fell 20% in early trading on Friday after the Old Navy owner warned that U.S. tariffs would squeeze this year's profit, even as the apparel maker aims to soften the blow by diversifying its supply chain and investing in U.S. cotton.
The company reaffirmed its annual forecasts that did not include tariff-related costs but flagged expenses of up to $300 million, which analysts said would weigh on Gap's margins through the second half of the year and into 2026.
Shares of the company, which owns brands such as Banana Republic and ON, were trading at $22.44. The stock has surged 30% so far this month, as investors focused on the firm's efforts to improve product innovation and store operations.
At least three brokerages trimmed price targets on the stock, with Jefferies cutting it by the most, to $26 from $29.
"Banana Republic and Athleta likely need much reinvestment to drive consistent positive comparable sales and margin expansion, in our view," UBS analyst Jay Sole said.
President Donald Trump's trade policy has threatened to upend supply chains and push up prices for everyday essentials.
Some retailers including Best Buy have accounted for the tariffs and a few others have pulled their forecasts. However, firms like Gap have excluded the impact from their outlook, citing an ever evolving trade policy.
Under the leadership of Richard Dickson, who took helm in 2023, Gap laid out plans to double the use of America-grown cotton by 2026, with executives on a post-earnings call saying that investing in the U.S., its biggest market, remains a key priority.
It has been diversifying its supplier footprint for several years, and currently has a less than 10% exposure to China. The region was one of its top manufacturing hubs, followed by Vietnam and Indonesia. It aims for no country to account for more than 25% by the end of 2026.
The company topped Wall Street estimates first-quarter sales and profit helped by full-price selling in its namesake and Old Navy brands.
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Time of India
2 days ago
- Time of India
Gap shares slide as tariffs loom large over apparel maker's turnaround plans
HighlightsGap Inc. shares fell 20% in early trading after the company warned that U.S. tariffs would impact this year's profit, estimating tariff-related costs between $250 million and $300 million. Under the leadership of Chief Executive Officer Richard Dickson, Gap Inc. plans to double the use of U.S.-grown cotton by 2026 and aims to diversify its supplier footprint to reduce reliance on any single country. Despite the tariff concerns, Gap Inc. reaffirmed its annual forecasts, excluding tariff-related costs, and reported first-quarter sales and profit that exceeded Wall Street estimates. By Savyata Mishra Gap shares fell 20% in early trading on Friday after the Old Navy owner warned that U.S. tariffs would squeeze this year's profit, even as the apparel maker aims to soften the blow by diversifying its supply chain and investing in U.S. cotton. The company reaffirmed its annual forecasts that did not include tariff-related costs but flagged expenses of up to $300 million, which analysts said would weigh on Gap's margins through the second half of the year and into 2026. Shares of the company, which owns brands such as Banana Republic and ON, were trading at $22.44. The stock has surged 30% so far this month, as investors focused on the firm's efforts to improve product innovation and store operations. At least three brokerages trimmed price targets on the stock, with Jefferies cutting it by the most, to $26 from $29. "Banana Republic and Athleta likely need much reinvestment to drive consistent positive comparable sales and margin expansion, in our view," UBS analyst Jay Sole said. President Donald Trump's trade policy has threatened to upend supply chains and push up prices for everyday essentials. Some retailers including Best Buy have accounted for the tariffs and a few others have pulled their forecasts. However, firms like Gap have excluded the impact from their outlook, citing an ever evolving trade policy. Under the leadership of Richard Dickson, who took helm in 2023, Gap laid out plans to double the use of America-grown cotton by 2026, with executives on a post-earnings call saying that investing in the U.S., its biggest market, remains a key priority. It has been diversifying its supplier footprint for several years, and currently has a less than 10% exposure to China. The region was one of its top manufacturing hubs, followed by Vietnam and Indonesia. It aims for no country to account for more than 25% by the end of 2026. The company topped Wall Street estimates first-quarter sales and profit helped by full-price selling in its namesake and Old Navy brands.
News18
2 days ago
- News18
Trump Stumps Old Allies: POTUS Looks To Bridge The 'Gulf' As Ties With Musk, Putin & India Suffer
Last Updated: Under Trump, 'closest allies' are often defined less by diplomatic traditions and more by ideological alignment, economic benefits, and willingness to serve US strategic interests In the ever-evolving landscape of global politics, US President Donald Trump's alliances have been as fluid as the tides. Once seen as a key player with powerful figures like Elon Musk and Vladimir Putin, a closer look reveals a narrative of shifting relationships, with some former allies drifting away while new partnerships, such as with Qatar, emerge. This dynamic highlights Trump's transactional approach to diplomacy, prioritising national interests and economic benefits over traditional ideological alignments. Musk The relationship between Donald Trump and Elon Musk, initially marked by camaraderie and shared populist appeals, has shown signs of strain. While Musk served in an advisory capacity in Trump's administration through the Department of Government Efficiency (DOGE), recent reports suggest a cooling of their political bond. Musk's departure from his government cost-cutting initiative, coupled with his public criticisms of certain Trump administration policies—such as the 'massive spending bill"—indicate a growing divergence. Though Trump has publicly stated that Musk is 'not really leaving" and will remain an adviser, the billionaire's focus appears to be shifting back to his business empire, particularly as Tesla navigates challenging market conditions. The initial alignment, perhaps fuelled by a mutual disruptive ethos, has given way to a more pragmatic distance. While still emphasising his ability to broker a peace deal and threatening further sanctions, this rhetoric marks a departure from the largely deferential tone of his earlier interactions. The ongoing war has forced a recalibration of Trump's public stance, even as his underlying 'America First" philosophy continues to shape his approach to international conflicts. Netanyahu The relationship between Donald Trump and Benjamin Netanyahu, once famously close and ideologically aligned, has experienced significant strain and, in some key areas, a noticeable deterioration. While both leaders shared a strong conservative and nationalist bent, and Trump's administration delivered several major policy wins for Israel (e.g., moving the US embassy to Jerusalem, recognising Israeli sovereignty over the Golan Heights, and brokering the Abraham Accords), a transactional approach and personal grievances have led to friction. A significant and deeply personal rift for Trump came in 2020 when Netanyahu publicly congratulated Joe Biden on his election victory. Trump, who continues to dispute the election results, viewed this as a profound betrayal, reportedly stating, 'The first person that congratulated [Biden] was Bibi Netanyahu, the man that I did more for than any other person I dealt with. He has made a terrible mistake." Since the October 7, 2023, Hamas attacks and the subsequent war in Gaza, Trump has expressed increasing frustration with Netanyahu's handling of the conflict. While initially supportive, Trump has reportedly grown 'fed up" with Netanyahu's resistance to American directives and the prolonged nature of the war. Trump appears to desire a quick, decisive win that he can claim as his own, which clashes with Netanyahu's stated goal of completely dismantling Hamas and his government's maximalist war aims. Trump has pushed for humanitarian access and de-escalation in Gaza, backing new aid delivery systems. Netanyahu, on the other hand, has remained primarily committed to a hardline military campaign, often downplaying humanitarian concerns and the need for immediate ceasefires, which creates a divergence from Trump's desire for a swift resolution. A clear symbol of the fraying relationship was Trump's recent Middle East tour, which included visits to Saudi Arabia, Qatar, and the UAE but conspicuously omitted Israel, despite Israeli lobbying. This is a stark contrast to his past visits and underscores a shift in priorities. India While the India-US relationship has generally strengthened over the past two decades, characterised by growing strategic convergence, Donald Trump's 'America First" approach and transactional diplomacy have introduced points of friction, particularly concerning trade. Trump has consistently criticised India for its high tariffs on American goods, even famously calling India the 'tariff king" and a 'big abuser" in global trade. This rhetoric is a direct consequence of his focus on trade deficits and what he perceives as unfair trade practices. Trump has advocated for and, in some cases, imposed 'reciprocal tariffs," meaning the US would charge the same tariff rates on imports from other countries as those nations impose on US exports. This has led to specific tariffs on Indian goods, even if temporarily paused for negotiations. The Trump administration is also likely to continue pushing India to reduce trade barriers and tariffs in various sectors, including agriculture, automobiles, and alcoholic beverages. Also, Trump's repeated public statements about mediating the 'ceasefire" between India and Pakistan this month have been a significant source of diplomatic friction. Indian officials have consistently maintained that this was a bilateral issue and rejected any third-party intervention. These claims have been seen in India as an attempt to undermine its diplomatic position. Trump's stricter immigration policies, including threats of higher tariffs on BRICS nations and increased deportations, can impact the Indian diaspora in the US and create friction in people-to-people ties. Europe and NATO Trump's relationship with Europe has been marked by significant tension and a clear divergence from decades of established transatlantic cooperation. His 'America First" policy directly challenges the bedrock principles of the post-World War II international order, leading to a palpable sense of unease and, at times, open frustration among European leaders. Trump has consistently and vociferously criticised European NATO members for not meeting their defence spending commitments (2% of GDP). He has threatened to withdraw US troops from Europe or even pull the United States out of NATO altogether if allies didn't increase their contributions, questioning the very mutual defence clause (Article 5) of the alliance. Beyond spending, Trump's overall disdain for multilateral institutions and his sometimes admiring tone towards Vladimir Putin have caused deep concern in Europe, particularly among Eastern European states bordering Russia. His approach has been seen as weakening the collective security framework that has protected Europe for decades. Trump has viewed the European Union as a protectionist entity that unfairly took advantage of the US. He imposed tariffs on steel and aluminium imports from the EU, citing national security concerns, which was met with retaliatory tariffs from the EU on American goods. He has also threatened significant tariffs on European automobiles, a major concern for Germany's powerful auto industry. Trump's decision to withdraw the US from the Paris Agreement on climate change was met with widespread condemnation and disappointment across Europe, where climate action is a high priority. European leaders reaffirmed their commitment to the accord and intensified their own climate policies. The US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) with Iran, despite European efforts to salvage it, also created a major rift. European nations largely viewed the deal as crucial for preventing Iran from developing nuclear weapons and saw the US withdrawal as destabilising. Trump's administration actively undermined the World Trade Organization (WTO) by blocking appointments to its appellate body, effectively paralysing its dispute settlement mechanism. Members of Trump's administration have sometimes publicly weighed in on European elections and policies, breaking diplomatic norms and further irritating European governments. Trump openly supported Brexit and even suggested other countries should leave the EU. Finding new friends, particularly in Middle East As certain old alliances have waned or become more nuanced, Trump has actively sought and cultivated new partnerships, often driven by economic opportunities and strategic interests. Qatar stands out as a prime example of such an emerging alliance. During a recent Middle East tour, Trump underscored a significant pivot in US strategy, prioritising economic deals and investments with wealthy Gulf states. Pentagon also announced on May 21 that it had officially accepted the luxury jet previously used by the Qatari royal family, a gift announced ahead of Trump's visit to the Middle East. From May 13 to 16, Trump undertook his first major international trip of his second term, visiting Saudi Arabia, Qatar, and the United Arab Emirates. He was joined by a Republican delegation and several business chief executives, including senior adviser Elon Musk. The four-day tour primarily focused on securing business deals and investments in the United States, which Trump claimed could reach as high as $4 trillion, as well as lifting sanctions on the transitional government of Syria. Trump met with Syrian President Ahmed al-Sharaa, the first time that the leaders had met since a meeting was convened between Bill Clinton and Hafez al-Assad in Geneva in 2000, and urged him to join the Abraham Accords. The United States announced over US$243 billion in deals with Qatar, including a US$1 billion defence agreement with Raytheon for Qatari counter-drone capabilities, a US$2 billion contract with General Atomics for MQ-9B unmanned aerial vehicles, and US$38 billion for Al Udeid Air Base. Trump later attended a state dinner at Lusail Palace, where he appealed to Qatar to improve Iran–United States relations. When Trump arrived in Abu Dhabi on May 15, he became the second serving US president to visit the country. He toured the Sheikh Zayed Grand Mosque with Khaled bin Mohamed Al Nahyan. The United Arab Emirates awarded Trump the Order of Zayed, the country's highest civil decoration. During the visit, the United States Department of Commerce announced a deal with the Emirates and Emirati artificial intelligence firm G42 to establish the largest data centre for artificial intelligence outside of the United States in Abu Dhabi. This burgeoning relationship with Gulf nations highlights several key aspects of Trump's foreign policy. It demonstrates his clear preference for 'the art of the deal" over traditional diplomatic engagements. The focus on massive economic commitments, job creation in the US, and strategic investments aligns perfectly with his 'America First" agenda. It signals a recalibration of US policy in the Middle East, moving away from an exclusive focus on long-standing security alliances towards a more transactional approach that seeks immediate and tangible benefits. Qatar, in particular, seems to have skillfully leveraged its position as a regional mediator and financial powerhouse, aligning its interests with Trump's transactional diplomacy to secure strategic partnerships and enhance its global standing. The deepening ties with Qatar reflect a foreign policy where economic incentives and pragmatic gains are increasingly at the forefront of US engagement. Trump has emphasised large economic agreements and investments with wealthy Gulf states, viewing them as key partners for trade and stability in the region. The Abraham Accords, brokered during his first term, also highlight this transactional approach to regional diplomacy. top videos View all Under the Trump administration, 'closest allies" are often defined less by long-standing diplomatic traditions and more by shared ideological alignment, economic benefits, and a willingness to align with US strategic interests on a transactional basis. (With agency inputs) About the Author News Desk The News Desk is a team of passionate editors and writers who break and analyse the most important events unfolding in India and abroad. From live updates to exclusive reports to in-depth explainers, the Desk More Watch India Pakistan Breaking News on CNN-News18. Get breaking news, in-depth analysis, and expert perspectives on everything from geopolitics to diplomacy and global trends. Stay informed with the latest world news only on News18. Download the News18 App to stay updated! tags : donald trump elon musk Middle East pakistan Vladimir Putin Location : New Delhi, India, India First Published: May 31, 2025, 08:30 IST News world Trump Stumps Old Allies: POTUS Looks To Bridge The 'Gulf' As Ties With Musk, Putin & India Suffer
Time of India
3 days ago
- Time of India
Wall Street slips as tariff concerns weigh on earnings, inflation data in focus
US stocks slipped in early trading Friday, giving back some of their recent gains as investors weighed a mixed batch of earnings reports, inflation data and ongoing uncertainty over the future of tariffs imposed under President Donald Trump. The S&P 500 fell 0.3% shortly after the opening bell, while the Dow Jones Industrial Average dropped 158 points, also 0.3%. The Nasdaq Composite declined by a similar margin. Leading the market lower was Gap Inc., whose shares tumbled after the retailer warned that tariffs on imports from China and other countries could increase its costs by as much as $300 million this fiscal year. This warning overshadowed its stronger-than-expected quarterly results. Meanwhile, Ulta Beauty rose 8% in early trading after reporting earnings and revenue that topped Wall Street forecasts, along with an upbeat full-year outlook. Investors also had an eye on Alphabet, parent company of Google, whose shares remained flat ahead of closing arguments in a landmark antitrust case that could result in major changes for the tech giant, which was previously ruled an illegal monopoly by a federal judge. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 5 Books Warren Buffett Wants You to Read In 2025 Blinkist: Warren Buffett's Reading List Undo Markets have been particularly sensitive to trade developments this week. Hopes were briefly lifted after a ruling from the US Court of International Trade determined that the 1977 International Emergency Economic Powers Act, used by Trump to justify sweeping tariffs, did not grant such authority. However, those tariffs remain in effect for now as the White House appeals the decision, leaving the ultimate resolution uncertain. The focus now shifts to the Commerce Department's April report on consumer spending, due later Friday. The release includes the Federal Reserve's preferred inflation measure, which analysts believe moved closer to the central bank's 2% target. With the Fed keeping interest rates unchanged for three consecutive meetings amid inflation and trade concerns, investors will be listening closely to public remarks from three Fed officials scheduled for later in the day. Global markets showed mixed movement. In Europe, France's CAC 40 rose 0.3%, Germany's DAX climbed 0.8%, and the UK's FTSE 100 added 0.6%. In Asia, Japan's Nikkei 225 dropped 1.2% to 37,965.10 after inflation data from Tokyo showed core prices rising faster than expected, fueling speculation that the Bank of Japan may raise interest rates. Australia's ASX 200 gained 0.3%, while South Korea's Kospi slipped 0.8% ahead of next week's presidential election. Hong Kong's Hang Seng lost 1.2% and China's Shanghai Composite shed 0.5%. The trade court's ruling applies only to some tariffs, leaving those on steel, aluminum, and automobiles—enacted under a different law—unaffected. On Thursday, the US Court of Appeals for the Federal Circuit allowed the president to continue collecting the contested tariffs temporarily while the case proceeds. In energy markets, US crude dipped 7 cents to $60.87 per barrel, while Brent crude fell 10 cents to $63.25. In currency trading, the US dollar weakened to 143.68 yen from 144.12 yen, and the euro edged down to $1.1344 from $1.1367. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
