Two retailers, two double-digit stock drops, one shared excuse: *fashion*. After a weak quarter, Gap and American Eagle both flagged soft apparel sales, cutting their outlook and margins. Both CEOs insisted the US consumer is doing fine, and Wall Street heard the alibi — but didn’t buy a word of it.
- stumbled on women’s dresses — what management called a fashion and value miss, as shares fell to their worst day in a year.
- wasn’t far behind — women’s denim and bottoms softened, with analysts warning its celebrity campaigns will be difficult to lap in H2.
Dressed down: Despite the bruising quarter, executives weren’t short on confidence. Gap CFO Katrina O’Connell called the consumer “resilient,” and American Eagle’s CEO Jay Schottenstein even said the economy was “very strong.” But with US inflation at a three-year high and consumer sentiment at a record low in May, the macro backdrop paints a harder picture. For the apparel sector, navigating a cautious consumer, the line between a product miss and a sector problem is getting harder to draw.
