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Gap Inc. (NYSE: GAP) reported a 2.2% year-over-year revenue increase to $3.46 billion in Q1, ending May 3, 2025. However, despite the earnings beat, shares dropped 6.1% on July 14, 2025, due to renewed tariff risks and a flat revenue outlook for Q2.
Gap’s full-year gross tariff costs are estimated at $250–$300 million, with $100–$150 million affecting net income. The U.S. Consumer Confidence Index fell to 93.0 in June, indicating a weakening consumer backdrop that is impacting apparel demand.
Currently, Gap trades at a steep discount compared to the S&P 500, with a price-to-sales ratio of 0.6 and a price-to-earnings ratio of 9.4. However, concerns over the company’s long-term growth potential and fundamentals persist as revenue over the past three years has declined at an average annual rate of 2.1%.
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