Aug 28 (Reuters) - Gap on Thursday forecast

weaker annual operating margin growth after posting quarterly

comparable sales below estimates, driven by impacts from tariffs

on imports of goods to the United States.

The company in May said that it had expected about $250

million to $300 million in tariff-related costs, but aimed to

mitigate more than half of that amount.

The hit comes from the reliance the company has on countries

that are under the radar of the Trump administration for hefty

tariffs. As of 2024, Gap sourced less than 10% of its

merchandise from China, which faces a 30% import duty. It

sources less than 1% from Mexico and Canada combined.

CEO Richard Dickson in May had said the company expects

reliance on China to be less than 3% exiting 2025, and for no

country to account for more than 25% by end of 2026.

The company now expects annual operating margin between 6.7%

and 7%, including a tariff impact in the range of 100 to 110

basis points. It logged a margin of 7.4% in 2024.

Gap continues to expect annual net sales to rise between 1%

and 2%.

Its Old Navy and Gap brands posted significant gains in

year-over-year visit in April and May before seeing visits taper

in June and July, as consumers appear to have accelerated

purchases to avoid anticipated price increases, according to

data firm Placer.ai.

Gap, like rivals including American Eagle and Levi

Strauss, has pushed its denim line with a new viral

"Better in Denim" campaign featuring the global girl group

KATSEYE. The campaign came weeks after American Eagle's "Great

Jeans" denim campaign with actress Sydney Sweeney.

Gap's second-quarter net sales rose slightly to $3.73

billion, in line with analysts' average estimates, according to

data compiled by LSEG.

The company's quarterly comparable sales of a 1% rise missed

estimates of 2.26% growth.