Despite impacts from tariffs and de minimis, apparel retailers report bright spots as brand names and direct sales channels bolster results.
The most recent quarterly earnings from LuluLemon, Gap Inc, URBN, VF, Levi’s, Tapestry and Dick’s highlighted the sector’s rush to bring in goods ahead of tariff deadlines and revealed cautious strategies toward mitigating duty exposure through price hikes. Fewer promotions and supply chain adjustments round out mitigation plans.
Denim led at brands like Calvin Klein, Old Navy and Gap, while activewear stumbled on misaligned styles at Athleta and Lululemon. Meanwhile Dick’s reported sports apparel and equipment is on trend.
Brand names and Gen Z drove Ralph Lauren and Tapestry, as both cater to a younger consumer.
Gap Inc Q2 2025 Earnings Overview
| US Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Earnings Per Share/YoY | YoY Inventory levels | |
| Gap Inc | $3.7B | 0.1% | 1% | 41.2%-140 bps | $0.57 / 5.6% | 8.9% |
| Athleta | $0.3B | (11)% | (9)% | |||
| Banana Republic | $0.5B | (1)% | 4% | |||
| Gap | $0.7B | 1% | 4% | |||
| Old Navy | $2.2B | 1% | 2% |
- Online sales increased 3%, compared to last year and represented 34% of total net sales.
- Gap Inc plans to close 35 stores in its brand portfolio by year end, compared to 56 stores last year.
- Gap Inc appointed Maggie Gauger as Global Brand President of Athleta.
- Guidance: Gap affirmed Inc its full year guidance of 1% to 2% revenue growth, which includes the tariff impact.
Gap Inc reported revenue of $3.7B, flat with last year, and overall comparable sales of 1%, driven by performance at its two biggest brands, Old Navy and Gap. Denim was the standout category at both brands.
Inventory
Inventory levels were up 8.9% YoY, as the result of accelerated receipts and higher costs due to tariffs. For the rest of the year, Gap Inc is tightening its unit inventory purchases to ensure maximum flexibility and responsiveness to consumer demand. It plans to operate in line with its inventory principle of “unit purchases below sales.”
Pricing
Gap Inc is using targeted pricing to mitigate tariffs; the company takes a portfolio approach to pricing, and is focused on maintaining the overall value proposition. Chief financial officer Katrina O’Connell said the company is maintaining its approach to pricing. “We’re using discipline. We’ve got insights, and we’ve got a clear view of elasticity across our geographies, brands down to the category level.”
Consumer behavior
Traffic and sales were up in the quarter at the company’s biggest brands, Old Navy and Gap. Sales were driven by higher average unit retail (AURs). “We saw AUR growth in the second quarter with customers responding well to our style, quality and value, which we continue to advance. This gives us confidence that we can continue to drive AUR growth as we enter the second half, particularly at Gap and Old Navy” O’Connell said.
Old Navy’s denim and active categories helped to fuel the company’s growth; in Q2, Old Navy denim posted the highest volume in 10 years. Gap’s performance was also led by denim, with particular strength in women’s and the launch of its Better in Denim campaign. The company is reestablishing Banana Republic in the premium lifestyle category, and continues to refine the assortment and aesthetic. The company appointed Maggie Gauger from Nike as the new CEO of Athleta, and has deemed 2025 as a “reset” year for the brand as its styles are not aligned with the customer.
Lululemon Q2 2025 Earnings Overview
| Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Earnings Per Share/YoY | YoY Inventory levels | |
| Lululemon | $2.53B | 6.5% | 1% | 58.5%-110 bps | $3.10 / (1.6)% | 21% |
- Digital revenues increased 9% YoY and accounted for 39% of the total revenue.
- In the Americas, revenue increased 1% on both a reported and constant currency basis, with comparable sales down 3%. Mainland China revenue increased 25%, or 24% in constant currency, with comparable sales increasing 16%. In the rest of the world, revenue grew by 19%, or 15% in constant currency, with comparable sales increasing by 9%
- The company added 14 net new company-operated stores during the second quarter, ending with 784 locations.
- Lululemon appointed Ranju Das as its first Chief AI and Technology Officer
- Guidance: The company lowered its full year guidance. It now expects net revenue to be in the range of $10.85B to $11.0B, representing growth of 2% to 4%, down from $11.15B to $11.3B. Diluted earnings per share are now expected to be in the range of $12.77 to $12.97, down from $14.58 to $14.78 for the year. The 2025 guidance assumes a tax rate of approximately 30%. The guidance for 2025 includes an estimated reduction in gross profit of approximately $240 million, net of currently anticipated tariff mitigation efforts, including vendor savings and pricing actions, and based on higher tariffs for U.S. goods and the end of the de minimis exemption.
“While we continued to see positive momentum overall in our international regions in the second quarter, we are disappointed with our U.S. business results and aspects of our product execution,” said chief executive officer Calvin McDonald, adding the company is working on its merchandise mix.
Inventory
On a unit basis, inventories increased 13%. Dollar inventory growth at the end of the second quarter of 2025 increased 21% YoY, attributed to higher tariff rates and foreign exchange.
Pricing
The company’s actions to mitigate increased tariff costs include: strategic pricing actions, supply chain initiatives, including vendor negotiations, and enterprise-wide expense savings initiatives. Meghan Frank, CFO, said Lululemon is instituting modest price increases on a small portion of its assortment. The company will continue to look at pricing increases as an option throughout the second half of the year and into next year.
The de minimis exemption, included in the company’s guidance, is expected to have an impact of $240 million to its gross margin, a 220 basis point impact.
Consumer behavior
The overall market for premium athletic wear in the U.S. remains challenging with declines continuing in Q2, according to the company. “Consumers are spending less on apparel overall, spending less in performance activewear, and are being more selective in their purchases, seeking out truly new styles,” McDonald said. He added there are many more competitors in the market as compared to a few years ago.
The company is focusing on increasing newness in core styles as a percentage of its total assortment from 23% of the total to 35% by next spring.
The company sees continued growth in its performance apparel and growth overall across its key activities: yoga, run, train, golf and tennis.
By category, men’s revenue increased 6% YoY, women’s increased by 5% YoY, and accessories increased by 15% YoY.
PVH Q2 2025 Earnings Overview
| Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | EPSEarnings Per Share/YoY | YoY Inventory levels | |
| PVH | $2.17B | 4% | 4% | 57.7%-240 bps | $2.52 / (16.3)% | +13% |
- Direct to consumer (DTC) revenue increased 4% YoY
- Guidance: PVH raised its full year revenue outlook to be up low single digits, compared to previous estimates that saw revenue flat to a slight increase. The company reaffirms its outlook of earnings per share to be in the range of $10.75 to $11.00 on a non-GAAP basis. The outlook includes an estimated net negative impact related to the U.S. tariffs, including an unmitigated impact of approximately $1.15 per share, compared to approximately $1.05 previously.
PVH reported 4% revenue growth YoY, driven by increases in both of its brands. Calvin Klein revenue increased 5% YoY and Tommy Hilfiger revenue increased 4% YoY.
Inventory
The company reported inventory was up 13% YoY, which included a 1% increase due to tariffs. The rest of the increase was primarily due to an investment in core product categories to support projected sales in the third quarter.
Pricing
The company is working through how to best mitigate tariffs. PVH reported international business accounts for 70% of revenue. It also boasts a large diversified supply chain. Stefan Larsson, chief executive officer, PVH Corp, credits the company’s powerhouse brands, saying, “We also have the strength of being Calvin Klein and Tommy Hilfiger. So we have two of the most iconic beloved premium brands in the market.”
PVH reported it plans to mitigate 50% of the tariff costs it had already announced and will expand its mitigation efforts throughout 2026. The company will look at the supply chain and internal efficiencies first to try to mitigate the impact. Pricing actions will be targeted based on pricing power and balancing the price and value for the consumer.
Consumer behavior
PVH is focusing on innovation in its core product categories and marketing campaigns featuring celebrities to boost customer engagement.
Calvin Klein categories with the strongest performance were denim and underwear. Women’s sportswear and denim in North America contributed to overall growth.
Tommy Hilfiger results were supported by marketing collaborations with major sporting events, including Formula One.
Ralph Lauren Q1 2026 Earnings Overview
| Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Earnings Per Share/YoY | YoY Inventory levels | |
| Ralph Lauren | $1.7B | 14%* | 13% | 72.3%+180 bps | $3.52 / 34.9% | 17.6% |
*On a reported basis; 11% in constant currency
- North America revenue increased 8% YoY to $656M on a reported basis, store comps increased 10% YoY and digital commerce increased 19% YoY.
- Europe revenue increased 16% to $555 million on a reported basis, store comps increased 10% YoY and digital commerce increased 11% YoY.
- Asia revenue increased 21% to $474 million on a reported basis, store comps increased 16% YoY and digital commerce increased 35% YoY.
- Global direct-to-consumer comparable store sales grew 13%
- Guidance: Ralph Lauren raised its full year guidance and expects revenues to increase to low- to mid-single digits on a constant currency basis, up from low-single digit revenue growth on a constant currency basis. Based on current exchange rates, foreign currency is expected to benefit revenue growth by approximately 150 to 200 basis points for the year.
Ralph Lauren reported strength across each of its regions, with a 14% YoY revenue increase on a reported basis (11% on a constant currency basis YoY) and 13% comp increase YoY.
“While we continue to approach the current global operating environment with prudence, we are encouraged by the broad-based strength in our brand and our businesses as we execute on our long-term strategic priorities — including recruiting new and younger consumers, strengthening our core and high-potential categories, and developing our key city ecosystems in each region,” said Patrice Louvet, president and CEO.
Inventory
Inventory increased 18% YoY. This is attributed to global product demand, front loading in North America and foreign currency headwinds. The company anticipates inventory levels to moderate progressively through the end of the year and to be approximately in line with revenue growth.
Pricing
The company’s average unit retail (AUR) increased 14% in the quarter, supported by strong full price selling trends, reduced discounting and favorable channel and geographic mix. The company expects high single digit AUR growth for 2026, which reflects its brand elevation strategy, which includes selective pricing actions in North America and Asia for fall 2025. In addition to AUR growth, Ralph Lauren expects continued unit growth in targeted markets, channels and categories.
Heading into fall, the company is watching inflation with plans to refine pricing and promotions, as necessary, said Justin Picicci, chief financial officer.
He added, “But what we’re continuing to be laser focused on is really providing that compelling value proposition to our consumers. Our AUR growth over the last eight plus years of 100 plus percent, it came along with growth in value perception, growth in luxury perception. So we’re not gonna take our eye off the ball and make sure that consumers feel like they’re getting more for more in our total value proposition.”
Consumer behavior
The company has been shifting its business towards a more elevated full price consumer base. Its core consumer has been resilient globally. Ralph Lauren added 1.4M new customers to its DTC in the quarter which are “younger, higher value customers.”
Ralph Lauren’s core products represent more than 70% of its business. Core product sales grew in the mid-teens YoY, driven by seasonal sweater polos, cotton cable knit and merino sweaters, and lightweight outerwear and caps.
The company’s “high potential categories”—women’s apparel, outerwear and handbags—increased by double digits YoY.
Tapestry Q4 2025 Earnings Overview
| Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Earnings Per Share/YoY | YoY Inventory levels | |
| Tapestry | $1.72B | 8% | N/A | 76.3% 140 bps | $1.04 / 12% | 4% |
| Coach | $1.43B | 13% | ||||
| Kate Spade | $0.25B | (13)% | ||||
| Stuart Weitzman | $0.46B | (10)% |
- In August 2025, Tapestry sold the Stuart Weitzman brand to Caleres.
- Guidance: The company provided full year guidance with mid single digit revenue growth, approaching $7.2B. Tapestry expects EPS to be between $5.30 and $5.45, up 4% to 7%, which includes a headwind of over $0.60 from incremental tariffs and duties.
Tapestry reported 8% revenue growth in constant currency YoY, led by Coach.
“Coach is a storied 85-year-old brand. And this fiscal year was the strongest in history. Our success is rooted in our brand building capabilities. We’ve been intensely focused on understanding our target Gen Z consumer and creating emotional connections that fuel brand desire, which have allowed us to reimagine a heritage brand for modern consumers. Coach is redefining what’s possible when you blend consumer obsession with disciplined brand building and creativity,” said Joanne Crevoiserat, CEO of Tapestry.
Inventory
Inventory levels were up 4% YoY, excluding the Stuart Weitzman inventory held for sale, due to frontloading to mitigate tariff impacts.
Pricing
The company expects profit headwinds from tariffs, duties and the ending of de minimis exemptions to impact profitability by $160M, representing 230 basis points of margin headwind. In order to mitigate the impacts, Tapestry is optimizing its global manufacturing footprint to minimize tariff exposure, where possible, and working closely with service providers to drive efficiencies.
Scott Roe, Tapestry CFO and COO said, “First on sales, our trends in the first quarter are strong, and in fact, we’ve accelerated into the new [fiscal] year led by Coach with stronger full price selling. We are building the brand for continued healthy gains well into the future. This is our priority and we’re executing behind it.”
Consumer behavior
Coach increased new customers in North America by one million in the quarter; approximately 70% of these new customers are Gen Z or Millennials who the company said transact at higher AURs than the balance of the client base. “This strong traction with our customers is our future,” said Todd Kahn, CEO and brand president of Coach.
Coach’s leather goods increased by double digits YoY, driven by the Tabby bag and Kiss Lock bags, which sold out within hours.
The company is focusing on resetting the Kate Spade brand, which includes investing in marketing, solidifying strategy to bring more focus, reducing handbag count and applying learnings from Coach.
URBN Q2 2025 Earnings Overview
| US Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Earnings Per Share/YoY | YoY Inventory levels | |
| URBN | $1.5B | 11.3% | 5.6% | 37.6% +113 bps | $1.58 / 27.4% | 15.1% |
| Anthropologie | $0.6B | 6.7% | 5.7% | |||
| Free People | $0.4B | 13.7% | 6.7% | |||
| Urban Outfitters | $0.3B | 5.2% | 4.2% | |||
| Nuuly | $0.1B | 53.2% | N/A |
- Nuuly, the company’s subscription service, delivered 53% revenue growth with a 48% YoY increase in average active subscribers.
- Guidance: The company projected high single-digit sales growth and mid single digit comp sale growth for Q3. At Nuuly, the company expects mid double digit revenue growth, driven by continued subscriber momentum.
URBN reported 11% YoY revenue growth, with each of its brands delivering positive comps and four of its brands posting record Q2 sales.
Inventory
Inventory was 15.1% at the end of the quarter. The inventory level was slightly elevated due to frontloading. In the third quarter, the company expects inventory to grow along with sales, as the teams are focusing on turning products.
Pricing
The company is taking the following tariff mitigation strategies: negotiating better terms with vendors, diversifying countries of origin, changing the mode of transportation from air to ocean and strategically adjusting pricing to minimize the impact on customers.
Frank Conforti, co-president and COO, URBN said, “We’re looking to protect opening price points and only targeting areas where we believe we could gently raise some prices without significantly affecting the overall customer experience.”
The company reduced markdowns by “hundreds of basis points” and considerably reduced its loss YoY.
The impact of tariffs (with the 50% India tariff included) could be approximately 75 basis points on the gross margin for the second half of the year.
Consumer behavior
Women’s apparel and accessories were standouts with strong double digit growth, and men’s and home categories also performed well, while proprietary brands continue to gain market share.
VF Corp Q1 2026 Earnings Overview
| US Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Earnings Per Share | YoY Inventory levels | |
| VF Corp | $1.8B | (0.5)% | N/A | 54.1% 200 bps | ($0.24) | 4% |
- The company focused on its Reinvent transformation program, which includes cost reduction, margin improvement and brand repositioning. Bracken Darrell, president and CEO, VF Corp, highlighted his top three priorities. First to bring its Vans brand back to growth; revenue was down 14% YoY. Second, grow the North Face brand from mid single digits to high single digits. Third, support sustained momentum at Timberland brand; revenue was up 11% YoY.
- The company has changed its reporting from brands to segments; its brands will now be reported under “outdoor” and “active.”
- Guidance: VF Corporation expects to see an increase in adjusted operating income and operating cash flow for the full year, after accounting for tariffs.
“As I pass the two-year mark in my role as CEO, we are on track with VF’s transformation. We are lowering costs, improving margins, reducing debt and transforming the organization. We have reset the table and soon will move to growth. That is what we are all here for and what the entire organization is now focused on,” Darrell said.
Inventory
Inventory levels were up by 4% YoY.
“I think around the world, you’ve got a little bit of hesitation by wholesalers to overextend themselves on inventory,” Darrell said. “Traffic has generally slowed a little bit as we’ve gone through the summer, especially during this period of real uncertainty around what’s gonna happen to tariffs. I do think it’s kind of caused a bit of conservatism.”
Pricing
The company reported that as the cost of tariffs begin to flow through inventory, it will assess and react to prices and costs with agility.
Consumer behavior
The North Face revenues were up 6% YoY, driven by lower promotions. Product drivers include technical trail running footwear, newness in lifestyle apparel, and bags and packs.
Timberland revenues were up 11% with global growth in DTC and wholesale with lower discounting contributing to higher margins. Category highlights include the boat shoe and sustained momentum in the 6” boot during warmer seasons.
Dick’s Q2 2025 Earnings Overview
| Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Earnings Per Share/YoY | YoY Inventory levels | |
| Dick’s | $3.6B | 5.0% | 5.0% | 37.1% +33 bps | $4.38 / 0.2% | 7.1% |
- On May 15, 2025, the company announced that it entered into a definitive merger agreement to acquire Foot Locker.
- The company’s Game Changer app drew engagement and sales. The app is a live-streaming, scheduling and statistics tool for youth sports teams and coaches. The app had an average of 5.5 million monthly active users in 2Q 2025 and had over $100 million in sales, up 49% YoY.
- The company opened one new House of Sport concept and four new Field House experiential locations in the second quarter of fiscal 2025, targeting approximately 35 House of Sport and 42 Fieldhouse sites by year-end fiscal 2025.
- Guidance: Given the strong Q2 results and the confidence in the business, the company raised its full year 2025 guidance for net sales to be $13.75B to $13.95B, up from $13.6B to $13.9B. Comparable sales outlook increased to a range of 2.0% to 3.5%, adjusted up from 1.0% to 3.0%, and raised full year 2025 earnings per diluted share guidance adjusted up to a range of $13.90 to 14.50, from $13.80 to 14.40 previously. All known tariff impacts have been factored into the raised sales and earnings outlook.
Dick’s reported a 5% YoY revenue increase and comp sales up 5% YoY, driven by a 4.1% increase in average ticket and a 0.9% increase in transactions.
Inventory
Inventory levels were up by 7.1%, compared to last year with the company stating that inventory is “well-positioned” for the third quarter to drive sales.
Pricing
Dick’s has instituted some sporadic price increases, but the retailer reports they are “surgical” and not across the board. Promotional activity is not a big factor for the company. Dick’s said differentiated assortment allows it to lean into newness and innovation rather than a deep promotional cycle.
Consumer behavior
Dick’s is not seeing any consumer slowdown. Lauren Hobart, president and CEO, said, “I think our consumer across the board is doing so well, and you see that in the fact that we’re not seeing trade down from best to better or better to good. We’re seeing growth across all income demographics.”
The company saw growth across all of its key segments – footwear, apparel, team sports and golf. Dick’s attributed its differentiated national brand portfolio and vertical brands as a key driver for consumer demand.
Levi’s Q2 2025 Earnings Overview
| Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Earnings Per Share/YoY | YoY Inventory levels | |
| Levi’s | $1.45B | 6.4% | Not reported | 62.6% 140 bps | $0.22 / 37% | 15% |
- Direct-to-consumer net revenues increased 11% YoY and comprised 50% of total net revenues in the second quarter. Wholesale net revenues increased 3%.
- On May 20, 2025 the company announced the sale of Dockers to Authentic Brands Group.
- Guidance: “Given our strong H1 and continued momentum across the business—and despite higher tariffs—we are raising our full-year revenue and EPS expectations,” said Harmit Singh, chief financial and growth officer of Levi Strauss & Co. For the full year, net revenue growth is 1% to 2%, up from an previously anticipated -1% to -2%, and adjusted diluted EPS $1.25 to $1.30, up from $1.20 to $1.25.
Inventory
Inventory levels were up by 15% YoY. Approximately half of the inventory increase is for holiday sales. The remaining inventory reflects purchases ahead of tariffs, the disruption in the Red Sea and market buybacks. Inventory levels are expected to be approximately in line with revenue growth at the end of the year.
Pricing
Levi’s expects tariffs to impact its business by $25M to $30M for the remainder of the year; the company has included this impact in its earnings per share guidance by 2 to 3 cents. This guidance assumed an additional 30% tariff on goods arriving in the U.S. from China and an additional 10% tariff on U.S. imports from the rest of the world.
Singh said Levi’s is well-positioned despite the uncertainty, as 60% of the company’s business is international. He added the company is focused on reducing promotions and driving full-price sales through new products.
“Our key mitigation initiatives include promotion optimization, targeted pricing actions, vendor negotiations and further supply chain diversification. Looking beyond ’25, should tariffs remain in place at these levels, given our transformation initiatives, which provides us multiple levers, we believe we are better positioned than most to manage through this uncertainty,” Singh said.
Consumer behavior
Levi’s made strides in its shift towards becoming a DTC-first business across both brick and mortar and e-commerce and evolving from a denim bottoms business to an apparel lifestyle brand. The strength was broad-based:
- direct to consumer grew 11% and wholesale 3%
- E-commerce grew 13% and brick-and-mortar 10%
- international grew 10%, the U.S. 7%
- women’s grew 13% and men’s 6%
- tops grew 15% and bottoms 7%.
“We are just so pleased to report this quarter our third consecutive quarter of high single digit growth, plus 9%,” said Michelle Gass, president and CEO. “We’re seeing [broad-based growth] in units. We’re seeing it in rising AURs.”
