By Ananya Mariam Rajesh
(Reuters) -Gap said Thursday that US President Donald Trump’s prices would take a bite from his annual operating income but offered forecasts excluding this blow, sending his shares plumming 16% after hours.
The company provides around $ 250 million to $ 300 million in pricing costs, but aims to mitigate more than half of this amount.
“Released 2025, we are now expecting it to be less than 3% … Our goal is not to represent more than 25% at the end of 2026,” said Gap CEO Richard Dickson.
In 2024, the company obtained less than 10% of its goods from China.
The prices were the largest point of pain for hundreds of global companies, which warned that the costs linked to the move of supply chains, to expeditions and storage were prestigious margins. Walmart, a Bellwether consumer, said he should increase prices.
GAP reiterated its 2025 sales forecasts from 1% to 2% and operating income growth from 8% to 10%. It provides for a minimum impact on the gross margins of the second quarter, which should comply with the 41.8% of the first quarter.
“The fact that they do not include the pricing impact on the prospects probably weigh on the feeling around their prospects for the rest of the year,” said analyst Emarketer Sky Canaves.
The impact of the estimated rate is mainly weighted in the second half, according to Gap’s financial director Katrina O’Connell.
“We were very determined to separate the prospects from the impact of the estimated price,” added O’Connell.
GAP declared a turnover in the first quarter of $ 3.46 billion, beating the average estimate of analysts of $ 3.42 billion, according to data compiled by LSEG. He benefited from customers who buy more in his old naval and namesake brands after a style refresh in the last quarters.
Its profit of 51 cents per share beat estimates of 45 cents.
(Report by Ananya Mariam Rajesh in Bengaluru; edition by Shounak Dasgupta)
