Remember malls? Those glorious, overly air-conditioned monuments to consumption where you’d fill the idle hours of youth?
Well, some of the stores you’d walk past while trading stories about algebra class drama reported earnings this week—but the results are distinctly 2025.
Everyone’s a little worried about the apparel industry right now. Retail experts expected tariffs to hit the clothing industry especially hard due to its heavy reliance on imported goods. A forecast from the Yale University Budget Lab in April estimated that consumers will face 64% higher apparel prices short term” with prices staying 27% higher long term.
Meanwhile, the president of the United States Fashion Industry Association offered a blunt take on the trade war with China: “Ultimately no one wins.”
And now, we’re getting more insight into what winning looks like for the apparel industry right now. The main takeaway: “Winning” is all relative.
Abercrombie plans tariff mitigation efforts: One apparent victor is Abercrombie & Fitch. Despite cutting its profit outlook due to tariffs and trimming its operating margin forecast, shares of the retailer soared after its May 28 report on the back of its better-than-expected Q1.
Sales climbed to a record $1.1 billion, up 8% from the previous year. CEO Fran Horowitz noted it “was above our expectations and was supported by broad-based growth across our three regions.”
When it comes to tariffs, CFO Robert Ball said on an earnings call that Abercrombie expects a $70 million total impact for 2025, but with mitigation efforts—which will primarily focus “on the combination of supply chain footprint changes, vendor negotiations, and operating expense efficiencies”—the company plans to lower that cost to $50 million. Ball also said the company isn’t planning any “broad-based” price increases in light of tariffs. If the market reaction is any indication, this might be what winning looks like.
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Topsy-turvy tariffs could help off-price retailers: But Abercrombie reported earnings just before the US Court of International Trade blocked Trump’s reciprocal tariffs, saying he lacked the authority to impose such extensive tariffs.
At least one clothing retailer that reported soon after—Burlington Stores—cautiously saw the trade court ruling as a potential win, at least for off-price retailers. (That, of course, was before a higher court stayed the decision. Welcome to earnings calls in 2025.)
“As an off-price retailer, this is starting to feel like much more familiar territory. Instead of shortages, this topsy-turvy stop-start surge has the potential to create attractive buying opportunities,” Burlington CEO Michael O’Sullivan said on an earnings call Thursday, stressing that while the tariff situation remains “very dynamic…compared with two weeks ago, it’s starting to look like the disruption caused by tariffs could turn out very well for off-price.”
Burlington posted net income of $101 million, up from $79 million in the same period last year. Total sales made a 6% climb to $2.5 billion.
Gap predicts serious tariff impact: Meanwhile, if you want to know what “losing” looks like for the apparel industry right now, look at Gap. In its latest earnings report, the company said if 30% duties on Chinese imports and a 10% duty on imports from most other countries stay in effect, it could cost the company between $250 million and $300 million. With mitigation strategies, Gap said it estimates the “remaining net impact” of tariffs to be “about $100 million to $150 million.” The company excluded the impact of tariffs from its 2025 outlook.
Still, despite stated plans to double its usage of American cotton by 2026, and despite top and bottom line beats, Gap shares plummeted on the news. There’s a reason you just walked by some stores as a mall-bound teen.