Barclays reshuffles U.S. apparel retailers, cuts Under Armour, Gap ratings

Investing.com -- Barclays shook up its ratings across several U.S. apparel retailers on Monday, downgrading Under Armour and Gap while upgrading Abercrombie & Fitch, as the bank recalibrated its views on brand momentum, promotional activity and tariff exposure heading into the back half of the year.

Under Armour shares fell nearly 3% in premarket trading Tuesday by 07:27 ET, while Gap dipped 1.5%. Abercrombie rose 1.2%.

Analyst Adrienne Yih downgraded Under Armour to Underweight from Equal Weight, citing "delayed brand recovery," a competitive athletic sector, and "macro-related consumer malaise." She kept the price target unchanged at $5, implying nearly 15% downside.

While Under Armour’s fiscal first-quarter adjusted EPS of $0.05 beat consensus of $0.02, the company lowered its full-year revenue outlook to a mid-single-digit decline from a previously guided "slight" decline, reflecting softer consumer demand and increased promotional activity in North America and Asia-Pacific. Yih said the brand’s long product development cycle means "meaningful impact on sell-through and margins is unlikely" in the current fiscal year.

Gap was downgraded to Equal Weight from Overweight, with Barclays lowering its price target to $20 from $26. The bank’s proprietary promotional tracking showed elevated discounting at Old Navy and a shift toward deeper promotions at Banana Republic, partly offset by continued strength at the Gap brand.

Yih said Old Navy has also inflected to negative comparable sales, and that Athleta’s turnaround "continues to be delayed." The analyst noted she does "not view the turnaround as broken," but said risk/reward has become "more balanced" given rising margin pressure and reduced confidence in the durability of full-price selling.

Abercrombie & Fitch was the lone upgrade, moving to Equal Weight from Underweight, with Yih raising the price target to $114 from $78. She pointed to improving full-price selling at the Abercrombie brand, stabilization at Hollister, reduced tariff pressure for fiscal 2026, and inventory levels well aligned with sales.

Yih said the company’s "strong balance sheet and ongoing share repurchases provide additional EPS support" as sales growth normalizes following a temporary ERP-related headwind earlier in the year.

More broadly, Yih maintained a Positive view on the broader U.S. Specialty Retail, Apparel & Footwear sector. The analyst said she continues to favor brands with stronger pricing power and early-stage growth, including Ralph Lauren, Tapestry, On Holding, Steven Madden and Deckers, over names facing more difficult brand-reset dynamics like Under Armour.

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