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Time of India
4 days ago
- Business
- 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.
Yahoo
4 days ago
- Business
- Yahoo
Gap shares slide as tariffs loom large over apparel maker's turnaround plans
By Savyata Mishra (Reuters) - 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. Gap's forward price-to-earnings multiple (P/E), a common benchmark for valuing stocks, is 11.69, compared to a P/E ratio of 7.99 for Abercrombie & Fitch and 10.02 for American Eagle Outfitters, according to LSEG.
Business of Fashion
08-05-2025
- Business
- Business of Fashion
Coach Owner Tapestry Lifts Forecasts on Pricier Handbags, Low Tariff Impact
Tapestry on Thursday raised its 2025 revenue and profit forecasts for a third time this year, taking advantage of its limited exposure to the sweeping US tariffs and higher full-price sale of its popular Coach handbags. Its shares jumped about 10 percent in premarket trading as steady demand for the company's Tabby, Brooklyn and Empire leather handbags among younger shoppers in North America and China helped it beat third-quarter results expectations. The company's sales benefited from product innovations, a sharp marketing strategy and full-price selling and come despite a downturn in the luxury market that has hurt players such as French luxury groups LVMH and Kering. 'Tapestry, it seems, has found a sweet spot in the luxury food chain ...siphoning off high-end customers now reconsidering whether they really need a five-figure handbag,' said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. Tapestry's price increases boosted margins, which grew 140 basis points in the quarter from last year. Its Empire bags are priced between $250 and $895 on Coach's website, while Tabby's standard shoulder bags sell for $450. Sales in its biggest North America segment rose 9 percent, while in Europe it surged 32 percent. Coach, which makes up roughly 80 percent of overall sales for Tapestry, saw sales grow 13 percent from last year. Coach products are made in Vietnam, Cambodia, the Philippines and India with no vendor providing 10 percent or more of total inventory purchases, according to Tapestry's 2024 annual report. It also had limited exposure to China. Tapestry expects profit of around $5 per share, compared to a prior forecast of $4.85 to $4.90. Annual revenue is projected to be about $6.95 billion, compared to its earlier expectation of more than $6.85 billion. Net sales for the quarter ended March 29 came in at $1.58 billion, above estimate of $1.53 billion, according to data compiled by LSEG. It earned $1.03 per share, beating estimates of 88 cents. By Savyata Mishra; Edited by Arun Koyyur Learn more: Tapestry Boosts Annual Outlook on Coach Strength The Coach-parent now sees revenue of more than $6.85 billion in the current fiscal year, the company said Thursday in a statement.
Yahoo
24-04-2025
- Business
- Yahoo
Footwear brand Skechers pulls annual forecast on trade uncertainty, shares drop
By Savyata Mishra (Reuters) -Skechers on Thursday withdrew its annual results forecast as the Trump administration's erratic trade policies fuel economic uncertainty, sending the footwear maker's shares down 7% in extended trading. The U.S.-based company is also looking to minimize production in "high-cost locations" by re-routing and diversifying its sourcing base, executives said on a post-earnings call. China production makes up nearly 38% of U.S. sales for Skechers, according to a Bank of America note dated April 9. President Donald Trump has ratcheted up import tariffs on Chinese goods to 145%. Higher levies push up input costs for U.S. companies with significant exposure to China, and ultimately result in price increases for American consumers. The administration's back-and-forth on tariffs has also made it difficult for businesses to make major spending decisions. "The current environment is simply too dynamic from which to plan results with a reasonable assurance of success," Skechers' chief operating officer, David Weinberg, said on the call. The company will begin to feel sizable impacts of the current tariff regime at the end of the current quarter and "fairly acutely" in the third quarter, executives warned. California-based Skechers also missed its first-quarter sales estimates on Thursday, logging growth of 7.1%, compared with expectations for a 7.9% jump, per data compiled by LSEG. Its China sales slid about 16% in the quarter ended March 31, steeper than a 11.5% decline in the prior three-month period. The company is among footwear makers such as Adidas, Nike and Puma that have significant exposure to manufacturing hubs in Asia, especially China. Skechers stock has lost about 25% of its value so far this year, as of its last close. Several consumer-facing companies including PepsiCo, Procter & Gamble and Kimberly-Clark have lowered their annual forecasts, as tariff uncertainty ramps up supply chain pressures. Sign in to access your portfolio
Yahoo
10-04-2025
- Business
- Yahoo
Modelo owner Constellation says Trump immigration crackdown hitting Hispanic customers
(Corrects paragraph 1 to say populations in key U.S. states, not populations in Mexico and other key markets) By Savyata Mishra (Reuters) -Modelo Especial owner Constellation Brands' beer sales are taking a hit as demand from Hispanic populations in key U.S. states slows down amid Trump's crackdown on immigration, company executives said on Thursday. President Trump has kicked off a sweeping immigration crackdown after taking office in January, ratcheting up pressures on the Hispanic consumers burdened by higher prices of food and other essentials as well as elevated unemployment rates. Modelo Especial is made exclusively in Mexico, and is imported and marketed in the United States by Constellation Brands. The brand has enjoyed huge popularity in the past couple of years, overtaking Bud Light as the top-selling beer brand in the U.S. in 2023. However, the momentum is now waning, with Constellation noting a sizable demand slump in its top sales states and zip codes with larger Hispanic populations. After markets close on Wednesday, the brewer projected a smaller-than-expected annual adjusted profit, expecting steep tariffs to weigh on its business. Latino customers, who represent roughly half of Modelo's customer base, have pulled back on social gatherings — a key occasion for beer consumption, according to Constellation Brands' CEO Bill Newlands. "Efforts to go to restaurants, to have social gatherings, things that are very much beer occasions, have softened in the more recent term," he said during its fourth-quarter earnings call. Constellation Brands' beers enjoy the highest level of loyalty among Hispanic consumers relative to any other major beer supplier in the U.S., the company said in its prepared remarks. Newlands said the company's research also found that Hispanic consumers were under pressure from job losses in industries with a high Latino employment base. "We think the quick change in tone/outlook at least partially reflects the likely reality that the company was benefiting over the past number of years from loose immigration policy," J.P. Morgan analyst Andrea Teixeira said in a note. Meanwhile, a 25% levy on aluminum and other broader tariffs under the Trump administration also threaten to lead to price hikes for these beers. Sign in to access your portfolio
