#grossmargin

CDW stock dropped 20% today after Q1 2026 earnings revealed a troubling disconnect: strong revenue growth of 9.2% to $5.68B, but shrinking margins. Gross margin fell from 21.6% to 21.0%, and operating income missed estimates by 18%. The market’s reaction wasn’t panic over one bad quarter — it was a verdict on a deeper structural problem.
CDW is fundamentally a “box sales” company — a distributor that moves IT hardware at scale. For years they’ve been trying to pivot toward higher-margin managed services and software to justify their valuation. That pivot isn’t working. Ironically, the AI hardware bo-m should be their moment, but instead of lifting profitability, it’s exposing exactly the problem: they’re selling more, but making less per dollar of revenue.
The long-term picture is concerning. Cloud providers and manufacturers are increasingly cutting out the middleman, and the managed services opportunity CDW was banking on is being eaten by AWS, Azure, and specialized competitors. With $5B in net debt, a deteriorating margin story, and a business model under secular pressure, CDW looks less like a buying opportunity and more like a potential value trap.

Apparently, things aren't all bubble gum an unicorns at Dell.

Dell faces margin pressure as surging DRAM prices and constrained supply inflate production costs for both server and consumer segments.

DELL's ISG and CSG margins are declining, with consolidated gross margin dropping over nine months.

Despite the robust AI server backlog and raised FY26 revenue guidance, we do not expect quick margin recovery.

DELL trades at a small premium to its 5-year average but remains at a 40% industry discount on key multiples.

I have been bad mouthing DXC Technology for some time , since before I retired for the lack of annual merit pay increases.

But reading all the blog posts about some DXC employees do quite quitting, quite striking I see why DXC margins are so high, if the employee's would work to the best of their ability (as they still are being paid a salary), the work would get done faster, the margins would go way down and the company might be able to retain more clients and also grab new ones.

When I was employed, I complained but always worked my butt off, as I have pride, ownership and didn't want to let my team mates down, or most of my supervisors/people managers and directors

Removing RSU is the best business decision. illumina has exceptional gross margin now. Give credit where it is due... A toast to Jacob!

Gap continues to show signs of being on firmer footing.

On Thursday, the San Francisco-based specialty retailer reported that net sales for the second quarter ended Aug. 2 reached $3.7 billion, which were flat compared to last year, though comparable sales, a better barometer of the business, rose 1 percent year-over-year.

Operating income was essentially flat at $292 million from $293 million a year ago. Net income rose to $216 million, up from $206 million in the year-ago period.

“When we roll up all of the components of our business and we look at our quarter results, it’s really showing our strategy is working,” Richard Di-kson, president and chief executive officer of Gap Inc., told WWD. “We had another solid quarter. We overdelivered on our profit expectations, and we achieved our top-line goals. Comps were up 1 percent in total. That’s the sixth consecutive quarter of positive comps, and our three largest brands all posted positive comps for the second quarter,” Di-kson said, referring to Old Navy, Gap and Banana Republic. Gap Inc.’s portfolio also includes Athleta.

“We’ve been building a strong balance sheet. We’ve got cash balances right now of $2.4 billion, which is up 13 percent year-over-year. So this is a real story about doing what we say we’re going to do, delivering with consistency, and it’s giving us great confidence as we head into the second half.”

Despite the stronger results, the retailer’s shares fell 2.8 percent to close at $21.68.

Gap Inc. expects $150 million to $175 million in tariff impact on its fiscal 2025 operating income, which translates to 100 to 110 basis point impact on operating margin.

“What’s really important is that while there’s an impact in 2025 we do not expect the annualization of tariffs in 2026,” Katrina O’Connell, Gap Inc.’s chief financial officer, told WWD. “As we look to address tariffs this year, we’re utilizing a lot of the levers. We’ve discussed thoughtful adjustments to our sourcing. We’re looking at manufacturing, we’re looking at assortments, we are doing some targeted pricing. But we’re really focused on sustaining the momentum and market share gains that our reinvigoration playbook is driving as we pursue our tariff mitigation plans.”

Asked what’s been selling best, Di-kson said, “It’s been an exciting denim season for the industry, but I think in particular, Gap brand has been leading the way.” He cited the launch last week of the “Better in Denim” campaign featuring the Katseye girl group, and said the campaign has become the number-one search on TikTok, with 400 million total views. “It’s proving Gap is a powerful pop culture brand, but the denim category for Gap and Old Navy has been outstanding for us. Going into the back half, we will continue that momentum.”

Di-kson also cited the active category as a strong performer, particularly at Old Navy, fueled by a recent campaign with Lindsay Lohan and product innovation, and strategic partnerships. “Our Disney partnership this past quarter was very successful combination of what we call family appeal and trend-right products.”

Di-kson continues to search for a new head of Banana Republic. The position has been vacant for over a year, though Di-kson has been very involved in rejuvenating the brand.

“Banana Republic does over $2 billion worth of business. There are very few $2 billion brands in the industry so you need somebody who really understands how to operate a brand at scale. Over the last year we’ve been working very hard to reestablish the brand, the positioning, the vision, the codification, if you will, and now that we’ve evolved as a brand we’re looking for somebody who can accelerate and execute against a strategy and vision versus reshaping the brand. The brand is in very good condition now.”

Banana Republic’s second-quarter net sales of $475 million were down 1 percent compared to last year, but comparable sales rose 4 percent.

Old Navy, the largest volume brand in the Gap Inc. portfolio, generated second-quarter sales of $2.2 billion, up 1 percent compared to last year. Comparable sales rose 2 percent. “Old Navy continues to demonstrate consistency in execution with reinvigoration efforts continuing to progress,” the company indicated in a statement issued Thursday.

Gap brand’s second-quarter net sales of $772 million were up 1 percent compared to last year. Comparable sales were up 4 percent, achieving positive comparable sales for the seventh consecutive quarter.

Athleta’s second-quarter net sales of $300 million were down 11 percent compared to last year, while comparable sales were down 9 percent. “The brand continues to focus on resetting for the long term and improving its product and marketing, which will take time,” the company noted.

In other statistics, Gap Inc.’s store sales decreased 1 percent compared to last year, but online sales increased 3 percent and represented 34 percent of total sales. The company ended the quarter with about 3,500 store locations in over 35 countries, of which 2,486 were company-operated.

Asked why store sales were down slightly, Di-kson replied, “We believe in our stores. Stores are a really important way for our customers to experience our brand. We’re also at a pivotal point with our fleet, which is positioned much more optimally. We’ve been doing a lot of coming back over the last several years. We’re also testing some new formats and experience like Gap in Flatiron and Banana Republic in SoHo,” Di-kson said, referring to the two Manhattan neighborhoods

“We believe we’ve got great opportunity to drive more business out of our stores,” Di-kson said. “But on balance, we really look at our omnichannel approach as a way to gauge our business and our consumer reaction.” Some of the decline in store sales is due to closures, particularly at Banana Republic, but traffic overall at the stores was up last quarter.

Gross margin in the second quarter came to 41.2 percent and decreased 140 basis points versus last year. Merchandise margin decreased 150 basis points versus last year, primarily driven by lapping the benefit of incremental sales in the second quarter of fiscal 2024 relating to the company’s revenue-sharing agreement with its credit card partners.

“Gap Inc. overdelivered on profit expectations and achieved our top-line goals. With positive comps for the sixth consecutive quarter, fueled by our three largest brands Old Navy, Gap and Banana Republic, it’s clear our strategy is working,” Di-kson said in his prepared statement. “Two years ago, I shared my vision for leading Gap Inc. into an exciting new chapter. Since then, we’ve built a stronger foundation with more relevant brands, a sharper operating platform, and a more unified culture while consistently demonstrating agility and resilience in dynamic environments. We are advancing our transformation with discipline, clarity, and momentum and remain committed to building a high-performing company that delivers sustainable, long-term value for our shareholders.”

The company ended the second quarter with cash, cash equivalents and short-term investments of $2.4 billion, an increase of 13 percent from the prior year.