Gap Stock Snaps 6-Day Winning Streak: CEO Vows To Mitigate Tariff Pressure, Denim Campaign Grabs Eyeballs

Gap’s ad campaign, “Better in Denim,” seen as a dig at American Eagle’s “Sydney Sweeney has great jeans” ad, went viral last week.

Gap shares dropped in after-hours trading on Thursday, after the fashion retailer’s mixed quarterly results. The company’s chief executive, however, claimed that strong performance from Gap and its other brands would help offset tariff pressures and that a recent ad campaign was extremely well received.

For the second quarter, Gap, which also owns Banana Republic, Old Navy, and Athleta brands, reported higher-than-expected adjusted EPS, and a marginal sales growth was in line with analysts’ forecast.

However, Gap raised its estimate for additional costs from tariffs this year to a range of $150 million to $175 million, from its May forecast of $100 million to $150 million.

Wall Street was somewhat reassured when CEO Richard Dickson said on the earnings call that Gap expects to “mitigate the full impact of tariffs over time.” Shares first dived in after-market trading before settling at 0.4% lower. The company also maintained its sales growth target of 1% to 2% for the year.

On Stocktwits, the retail sentiment climbed multiple notches in the ‘extremely bullish’ zone, and message volume increased from ‘high’ to ‘extremely high.’

“Rebound tomorrow easy money,” claimed one user, forecasting stock gains in Friday’s session.

Dickson also touted the success of Gap’s latest ad campaign, “Better in Denim,” featuring the girl group Katseye dancing to Kelis’s “Milkshake.” The ad, seen as a dig at American Eagle’s “Sydney Sweeney has great jeans” ad, went viral after its release last week.

“Twenty million views in the first three days, 400 million total views, and 8 billion total impressions. ‘Better in Denim’ is the No. 1 search on TikTok,” Dickson said on the call. “These aren’t small facts or small stats. This is proving that Gap is a powerful pop culture brand.”

Gap shares closed lower in Thursday’s session, snapping a six-day winning streak. The stock is down 8.3% year-to-date.

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