Becker Private Equity & Business Podcast
GAP Drops 20 Percent as CEOs Run for Cover 5-30-25
Fri, 30 May 2025
In this episode, Scott Becker discusses GAP’s steep stock decline and examines whether tariffs are the real issue or just an excuse for deeper management and product struggles.
Chapter 1: Why is GAP's stock in decline?
This is Scott Becker with the Becker Private Equity and Business Podcast. Thank you for listening. We're coming to you at the end of May. God bless. One of the stories we're following today is gap tanks. So one of the things I find fascinating, gap is down 20% today. And that's not what I find fascinating.
Chapter 2: What role do tariffs play in corporate struggles?
What I find fascinating is you have all these companies that have been struggling for a very long time. And one of the things that they all do now as they continue to struggle is now be able to point to tariffs as the reason they're struggling. So GAAP in its earnings says we're doing fine, but we're going to get crushed this year because of tariffs.
And again, there may be some truth to that, and clearly Best Buy used the same script the other day. But what I do think is though, so many of these companies have been really struggling for a long time, and this gives the CEO coverage. To say to their boards, it's not me that is screwed with the business plan here. It's tariffs. The reality is Best Buy has been struggling for some time.
The gap has been in trouble for it seems like decades. But the CEOs look for coverage. And the way that they get coverage. coverage is by saying it's an external factor that's causing them trouble. And that's what we're seeing today. Gap down 20% today as they point to tariffs as a problem. And the real problem is they've been poorly led without a vibrant product line for a long time.
It's very similar to Lululemon that had lost their vibe, and now they blame it on tariffs and everything else, but they just sort of had lost their vibe. Restoration Hardware, the same thing. And then you watch a day as Gap takes 20%. CEOs run for cover. Thank you for listening to the Becker Private Equity and Business Podcast.