Gap CEO Talks Expanding in Beauty and Accesories | Bloomberg Talks

Well, I think you know one of the reasons why now is also sort of a reflection of where we've been. And as you know we've been working really hard at fixing fundamentals of our business. Our core assets as you mentioned, Old Navy, Gap, Banana Republic, Athleta, these are iconic American brands but ultimately brands that we've been working to rebuild the core category apparel into consistent growth. We've proven that at this point in fact we reported our last earnings six quarters of comping the comp, our three largest brands also comping. We're growing our share which means the consumer is voting for us. From a financial perspective, we've stabilized, if you will, the middle of the P&L, and we're starting to see growth, cash balance really strong. So, we're in a very good position now where we're sort of moving into the next phase of our transformation strategy, which is about building momentum and accelerating growth. And when we look at our brand and portfolio, there are categories within our business that are small businesses that could be much larger important businesses. And those two are beauty and accessories. High margin, really exciting categories. Customers resonate with those categories in our stores already. And so we know we've got that relationship with consumers that are looking for that product in our stores and we can really dial those up to be meaningful businesses for our future.

Look, I think in any business, you're always dealing with things that are not necessarily in your control. And I think the reflection of a healthy company and a healthy culture is how resilient that culture is, how they remain agile and flexible to deal with circumstances that come our way. And tariffs is one of those circumstances. It certainly is a headwind. But we've done a really good job mitigating as much as we can at this juncture. We did also commit in 2026 to see no further degradation in the context of the impact of tariffs. We have our mitigation strategies that we've shared. Working with our suppliers, diversifying our manufacturing footprint, ultimately challenging our own choices of investments. Not compromising our long-term integrity, but being choiceful about when we invest and how much we invest. And making sure at the end of the day that while there are price increases that are part of our pricing strategy every year that we don't lose the value proposition to the consumer that we've been really reigniting across our portfolio.

Yeah. Well, look, there's a lot of componentry that goes into margin. What you could see in the context of our transformation and arguably even longer than that, our history, we're operating right now at gross margin highs. I mean, we've had incredible expansion of our gross margin. Now, we've done that through real savings and efficiencies. We've done it through better assortment planning, cutting our inventory, pulling back on unprofitable doors. Through that merchandising edit and better storytelling using our playbook as a form of execution, we've created more demand and more interest in our brands and are driving more full price selling, less discounting and more resonance. And so those are the most important healthy components of building back our margin. And I think as you look at our margin expansion over the last couple of years, we believe that we're sort of at a historical high in reference point, but that there's more opportunity for us as we get more efficient and as our brands get more relevant in the marketplace.