Gap's annual forecasts remained unchanged after it beat Wall Street expectations on first-quarter sales Thursday, as more customers bought Old Navy and its namesake brand following a recent style refresh.

Richard Dickson has stabilised the company's sales through initiatives like remodeling Gap stores and bringing trendy clothing.

Gap has made a number of moves, including partnerships with Parker Posey from the White Lotus TV show and Disney collaborations. The company launched the sports apparel line StudioSmooth, under Old Navy's banner. Banana Republic also featured vibrant prints and silk clothing.

Old Navy's comparable sales increased by 3% while Gap's banner saw a 5% increase.

The results are coming at a moment when many retailers, including Walmart and Target, have taken a cautious stance due to the impact that U.S. president Donald Trump's trade tariffs will have on international trading partners.

The majority of companies have either cut, withdrawn or held to their expectations for the year. This is despite the volatile global economy. A U.S. Trade Court blocked most of Trump's Tariffs on Wednesday. An appeals court reinstated them a day after.

Gap, who bought less than 10 percent of its merchandise in dollar terms from factories in China during fiscal 2024, expects to incur incremental costs between $250 and $300 million, but it has strategies in place to reduce more than half that amount.

It maintained its fiscal 2025 forecast of sales growth between 1% and 2%, with operating income growing by 8% to 10%. Gap stated that the forecast did not take into account the possible effect of tariffs.

LSEG data shows that the company's revenue for its first quarter rose by 2.2%, to $3.46billion, compared to analysts' estimates of $3.42billion.

It reported a profit per share of 51 cents. Analysts had expected earnings of 45 cents. (Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shounak Dasgupta)

(source: Reuters)