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Gap Inc. announced first-quarter earnings that beat expectations, but warned that new tariffs could impact its business by $100 million to $150 million. The company has mitigated about half the potential $250-$300 million impact from new duties on imports from China and other countries. Gap is diversifying its supply chain and increasing US cotton sourcing to offset tariff effects. Despite this, the company's overall performance exceeded analysts' predictions, with sales growth and earnings per share surpassing expectations. However, the gross margin forecast was weaker than expected, unrelated to tariffs, but due to the company lapping certain benefits from a prior year's credit card program.

Prepared by Christopher Adams and reviewed by editorial team.