Gap beats outlook on formal clothing demand

Gap Inc beat Wall Street estimates for quarterly sales and profit on Thursday, helped by steady demand from affluent consumers for its formal clothing and dresses despite a surge in inflation, sending its shares up about 10 per cent in extended trading.

People are preferring more formal clothing, dresses, woven tops and pants, shelving casual wear like t-shirts and shorts as they return to travel, work and social occasions after two years of pandemic-induced restrictions. Gap’s Banana Republic, an affordable luxury brand, posted an 8 per cent rise in sales, while its Old Navy brand that has been struggling with out-of-fashion clothes reported a 2 per cent increase.

However, Gap echoed retailer Kohl’s, which on Thursday warned soaring prices of essential commodities had dampened lower-income consumer’s spending on non-essentials like apparel.