Retail Shakeup: Under Armour, Gap Downgraded, Abercrombie Up

Barclays has recently adjusted its ratings for several key U.S. apparel retailers, reflecting a strategic shift in perspective on brand momentum and market conditions. Under Armour and Gap were downgraded, while Abercrombie & Fitch saw an upgrade.

Under Armour shares experienced a decline following its downgrade to Underweight. Analyst concerns cited a delayed brand recovery, intense sector competition, and broader consumer economic challenges. Despite a better-than-expected first quarter for adjusted earnings per share, the company reduced its full-year revenue forecast, anticipating a mid-single-digit decline due to weakened consumer demand and heightened promotional efforts.

Gap's rating was moved to Equal Weight from Overweight, accompanied by a reduced price target. Proprietary data indicated increased discounting across Old Navy and Banana Republic, impacting overall performance, though the core Gap brand showed continued strength. Old Navy's comparable sales have turned negative, and Athleta's turnaround is reportedly delayed.

In contrast, Abercrombie & Fitch was upgraded to Equal Weight, with an increased price target. This positive outlook is attributed to enhanced full-price selling at the Abercrombie brand, stabilization at Hollister, anticipated relief from tariff pressures in fiscal year 2026, and well-managed inventory levels.

Barclays maintains a positive stance on the broader U.S. specialty retail sector, recommending brands with robust pricing power and early growth stages. These include Ralph Lauren, Tapestry, On Holding, Steven Madden, and Deckers, over companies navigating more complex brand resets.