May 29 (Reuters) - Gap GAP.N kept its annual forecasts intact after beating Wall Street expectations for first-quarter sales on Thursday as more customers shopped for its Old Navy and namesake brands following a style refresh over the past few quarters.
Under CEO Richard Dickson, the company has stabilized sales by implementing initiatives such as remodeling of Gap stores and bringing in trendy clothing.
Gap has taken steps including partnerships with actor Parker Posey of the White Lotus TV series and Disney collaborations. The company also launched sports apparel line StudioSmooth under the Old Navy brand and featured more vivid prints and silk clothing at its Banana Republic banner.
Comparable sales at Old Navy rose 3%, while at Gap banner it increased 5%.
The results come at a time when most retailers including Walmart WMT.N and Target TGT.N have struck a cautious tone due to the impact of U.S. President Donald Trump's tariffs on global trading partners.
Most companies have either withdrawn, cut or stuck to their annual expectations while the global economic environment remains volatile with a U.S. trade court blocking most of Trump's tariffs on Wednesday and an appeals court reinstating them a day later.
Gap, which bought less than 10% of its merchandise, by dollar value, from factories in China in fiscal 2024, said it expects incremental costs of about $250 million to $300 million but has strategies to mitigate more than half of that amount.
It retained its fiscal 2025 sales forecast of 1% to 2% growth and operating income growth of 8% to 10%. Gap said the forecast does not reflect the potential effect of tariffs.
The company's first-quarter revenue rose 2.2% to $3.46 billion, compared with analysts' average estimates of $3.42 billion, according to data compiled by LSEG.
It reported a profit of 51 cents per share. Analysts were expecting earnings of 45 cents.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shounak Dasgupta)
((AnanyaMariam.Rajesh@thomsonreuters.com; X: https://twitter.com/AnanyaMariam))
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