Gap, American Eagle Fall as Weak Apparel Demand Signals Constrained Consumer Spending

A man walks past a Gap store on Oxford Street in London, Britain, July 1, 2021. (Reuters)
A man walks past a Gap store on Oxford Street in London, Britain, July 1, 2021. (Reuters)
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Gap, American Eagle Fall as Weak Apparel Demand Signals Constrained Consumer Spending

A man walks past a Gap store on Oxford Street in London, Britain, July 1, 2021. (Reuters)
A man walks past a Gap store on Oxford Street in London, Britain, July 1, 2021. (Reuters)

Shares of apparel makers Gap and American Eagle Outfitters dropped 15% and 10%, respectively, in premarket trade on Friday after weak annual forecasts, as consumers curb discretionary spending amid a tough macroeconomic climate.

Gap cut its annual sales forecast, while American Eagle maintained its full-year comparable sales and operating profit outlook but flagged a contraction in current-quarter gross margin, stoking worries about near-term demand.

US inflation posted its biggest increase ‌in three ‌years, while consumer sentiment hit a record low ‌in ⁠May, forcing households to ⁠tap savings and cut back on discretionary purchases such as clothes and accessories.

Both companies flagged weakness in certain women's seasonal categories, weighing on current-quarter results.

At Gap, which is undergoing a turnaround under CEO Richard Dickson, pressure centered on Old Navy, its largest banner, where seasonal women's apparel failed to connect ⁠with shoppers.

"Old Navy was the key swing ‌factor," BTIG analysts said in ‌a note.

"Weakness was concentrated in seasonal categories like dresses, where the assortment missed ‌on fashion and value, weighing on conversion despite solid traffic."

American ‌Eagle also came under pressure as strong demand at Aerie failed to offset weakness at its namesake brand, with women's bottoms hurt by changing fashion trends and a colder spring.

In a bid to ‌attract Gen Z shoppers and boost sales, the denim retailer, last month, unveiled a second ⁠campaign with "Euphoria" ⁠star Sydney Sweeney for its summer season denim shorts collection, a year after a viral and controversial ad featuring the actress fueled a stock rally.

Barclays noted heavy marketing spending is expected to recur in Q2 2026, but "bottoms including denim have since returned to underperformance".

It added American Eagle brand may struggle to lap its high-profile Sydney Sweeney and Travis Kelce campaigns and drive earnings growth in H2 2026.

Gap currently trades at 10.30 times its estimated earnings for the next 12 months, compared with 9.70 times for American Eagle and 7.43 times for Abercrombie & Fitch, according to LSEG data.



Clothing Rental Services Promise a Sustainable Alternative to Fast Fashion. Experts Say It Depends

A shopper browses for clothing at a Walmart store in Flagstaff, Arizona, US, October 19, 2022. (Reuters)
A shopper browses for clothing at a Walmart store in Flagstaff, Arizona, US, October 19, 2022. (Reuters)
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Clothing Rental Services Promise a Sustainable Alternative to Fast Fashion. Experts Say It Depends

A shopper browses for clothing at a Walmart store in Flagstaff, Arizona, US, October 19, 2022. (Reuters)
A shopper browses for clothing at a Walmart store in Flagstaff, Arizona, US, October 19, 2022. (Reuters)

For weddings, vacations or other special occasions, more consumers are turning to clothing rental services instead of buying something new.

These subscription-based services, often marketed as a sustainable alternative to fast fashion, ship straight to customers everything from everyday and workwear to dresses, handbags and formalwear. Then, the items are returned for someone else to use.

“I haven’t bought anything for a big occasion since 2019,” said Sasha Eck, a user of clothing rental services.

Along with giving her continuous and affordable access to newer, trendier clothes, she said renting formalwear made more sense than spending the equivalent of a month's rent on a dress she would only wear once. A recent survey from ThredUp suggests others face the same predicament, with the resale platform finding 87% of wedding guests said they had purchased at least one outfit they wore only once.

Clothing rental services appear to be an environmentally ethical alternative: One garment can be worn by multiple people instead of being tethered to a single closet. But fashion and logistics experts say the reality of rental subscriptions is more complicated, especially once shipping, returns and consumer habits are factored in.

The promise (and problem) of rental fashion

Kate Fletcher, a professor of sustainability, design and fashion systems at Manchester Metropolitan University, said rental services can sometimes encourage the same mindset that drives fast fashion.

“In theory, the embodied resources within that garment get a chance to be worked harder by having that many more people wear it. And so that’s the sort of compelling argument of it,” she said.

But Fletcher said many of those environmental benefits can be undermined by repeated shipping, returns and cleaning.

Aja Barber, a sustainability consultant and writer, said people often overlook the footprint of those processes.

“When you think about rental, you don’t think about the packaging that comes every time you get something from rental. You don’t think about the carbon footprint of shipping the item to you. And you certainly don’t think about the carbon footprint of dry cleaning,” said Barber.

Still, both experts said rental services can have advantages in certain situations.

“If you are someone who occasionally has to wear occasion-wear and you don’t want to buy a dress that you’re going to wear just once, I think it can be really impactful,” said Barber.

Fletcher pointed to older, more localized rental models, like with suit or gown rentals, where customers visited a shop, were fitted in person and later returned the item. She said those systems often had a very different environmental profile than modern, app-based rental services that rely on repeated shipping.

Why shipping matters

The rise of online shopping has heightened the environmental affect of “last mile delivery" — the final stage of transporting a package from a fulfillment center to a customer’s home. Transportation is already one of the largest contributors to greenhouse gas emissions, said Johanna Amaya, assistant professor of supply chain management at Pennsylvania State University.

“The more deliveries going to our homes, the more delivery that goes to our preferred location, the more that impact on the environment,” said Amaya.

Rental services can also create an added logistical challenge because the process involves two trips — one to deliver the clothing and another to return it.

Amaya said fast shipping can also make delivery systems less efficient because companies have less time to consolidate packages into fuller routes.

“The longer they can wait to consolidate more orders and use the capacity of the delivery vehicles, the better,” said Amaya.

She added that returning items to centralized locations, like parcel lockers or post offices, may be less environmentally impactful than home pickup services.

So what should consumers do?

Experts say renting can still be a better option in some situations, particularly for special occasion outfits that may otherwise only be worn once. But they also said consumers should think carefully about how often they are ordering, shipping and returning clothing.

Fletcher encouraged people to “look within a wardrobe and yourself before you look without and try and get a new piece.”

Amaya said consumers can reduce the environmental impact by avoiding rush shipping and choosing consolidated or pickup delivery options when possible.

And the broader sustainability challenge in fashion cannot be solved by a single service or product alone, Fletcher said.

For consumers trying to shop more sustainably overall, experts said some of the simple options may still be the most effective, like re-wearing clothing, repairing items, swapping with friends, buying secondhand or donating pieces so they continue to be used.

“The best thing we can do is engage with fashion as a practice. So, a lived experience of what it is to be dressed — full of capabilities of who I can be in the world — and not as something to buy,” Fletcher said. “Fashion as shopping, that sort of idea of it, is something that industry has encouraged us to believe is the only way of engaging with fashion. And fundamentally, that’s only going to lead to more climate impacts.”


'Robots Need Clothes': Humanoids Hit Catwalk in Seoul

Each human model and their android companion took turns to strut their stuff in unison. Pedro PARDO / AFP
Each human model and their android companion took turns to strut their stuff in unison. Pedro PARDO / AFP
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'Robots Need Clothes': Humanoids Hit Catwalk in Seoul

Each human model and their android companion took turns to strut their stuff in unison. Pedro PARDO / AFP
Each human model and their android companion took turns to strut their stuff in unison. Pedro PARDO / AFP

There were no naked robots in sight at a fashion show held in Seoul with a high-tech twist, where pairs of people and humanoids hit the catwalk in matching outfits.

A tasseled blue Texan-style ensemble -- complete with a cowboy hat for the robot -- and a retro silver puffer jacket were among the looks showcased at the event on Thursday.

Each human model and their shorter android companion took turns to strut their stuff in unison on stage, AFP said.

The designs, including silky dresses and billowing space-age black trousers like those worn by rock star David Bowie in the 1970s, were carefully fitted to the robots' skeletal frames.

Galaxy Corporation, the entertainment company behind the display, said it was meant to ask: "How can humans and robots coexist?"

"We realized that robots, too, need to wear clothes," CEO Choi Yong-ho said.

"Just as every human being is unique, we believe that every single robot should also be distinct."

The clothes were designed by the company, whose spokesperson said it hopes to launch them under the brand name "MACH 33" at the end of the year.

The robot models at the Seoul fashion show appeared to be a humanoid made by Chinese startup Unitree, which are popular due to their relatively low cost.

Increasingly dexterous robots have proven themselves capable of performing choreographed dances, participating in races, and even able to land backflips.

Financial services firm Morgan Stanley predicts the world could have more than a billion humanoids by 2050.

But fully automated robots -- using emerging physical AI technology -- are still rare, with most impressive displays remotely operated or pre-programmed.


Osaka Adds Ivory Train and Gold Bomber Jacket to Her Fashion Ensemble at French Open

Japan's Naomi Osaka (C) arrives prior to her women's singles match against Croatia's Donna Vekic on day 5 of the French Open tennis tournament on Court Simonne-Mathieu at the Roland-Garros Complex in Paris on May 28, 2026. (AFP)
Japan's Naomi Osaka (C) arrives prior to her women's singles match against Croatia's Donna Vekic on day 5 of the French Open tennis tournament on Court Simonne-Mathieu at the Roland-Garros Complex in Paris on May 28, 2026. (AFP)
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Osaka Adds Ivory Train and Gold Bomber Jacket to Her Fashion Ensemble at French Open

Japan's Naomi Osaka (C) arrives prior to her women's singles match against Croatia's Donna Vekic on day 5 of the French Open tennis tournament on Court Simonne-Mathieu at the Roland-Garros Complex in Paris on May 28, 2026. (AFP)
Japan's Naomi Osaka (C) arrives prior to her women's singles match against Croatia's Donna Vekic on day 5 of the French Open tennis tournament on Court Simonne-Mathieu at the Roland-Garros Complex in Paris on May 28, 2026. (AFP)

Naomi Osaka keeps bringing the fashion in Paris.

For the walk-on before her second match at the French Open, the tennis star wore a metallic gold bomber jacket over her sequined gold playing dress, offset by an ivory train in a look that mixes sportswear with couture.

Osaka then took off the train and jacket and handed the garments to a ball kid to remove them before starting to play against Donna Vekic on Court Simonne-Mathieu on Thursday.

For her opening match two days earlier, Osaka walked on in a ceremonial black skirt and sleeveless beaded bodice before revealing her gold dress, which she said reminded her of the Eiffel Tower sparkling at night.

“Athletes are in show business,” Osaka said after beating Laura Siegemund in her opener. “Grand Slam walk-ons are the only time that I possibly feel like I’m an entertainer.”