Gap will add beauty products to Old Navy stores later this year

Gap on Thursday announced it's expanding into beauty starting with its Old Navy brand, a strategic shift by the apparel company.

Its initial test will feature beauty and personal care products at 150 Old Navy stores, including dedicated beauty associates and some shop-in-shops. The company plans to scale the beauty business next year.

It is unclear if the company eventually plans to put beauty products in Gap brand stores.

"Gap Inc. sees a clear and meaningful opportunity to expand into this category with plans for a phased launch, starting with an initial test-and-learn expression at Old Navy later this fall," the company said in a statement.

The stock was trading roughly 2% higher Thursday morning following a brief halt.

The beauty segment has proven to be one of the most resilient in retail in recent years despite high inflation and worries about tariffs. Gap cited Euromonitor data that said the beauty and personal care market is one of the fastest growing categories in the U.S., projected to exceed $100 billion this year.

Even so, the success of beauty products has made it a more competitive space than ever.

The company said it will also expand its accessories business after seeing "strong customer reception" to its present products.

The new move comes as Gap has seen a resurgence over the past two years.

"This momentum is enabling Gap Inc. to seize exciting opportunities for growth and innovation, helping ensure the company remains competitive and successful in the future," the statement said.