Gap posts improved comps on Athleta and Old Navy strength, appoints new Banana Republic CEO
For the third quarter ended October 31, 2020, the San Francisco-based company’s net sales totaled $3.9 million, flat compared to the same period in the prior year. This reflected a 20% decline in brick-and-mortar sales, offset by a 61% increase in online sales, which represented 40% of Gap’s total revenues in the quarter.
The retailer’s Old Navy brand posted increases of 15% and 17% in its net and comparable sales, respectively, with the acceleration of its online business making a significant contribution to this progress.
At Athleta, net sales increased 35%, while comparable sales rose 37% – the strongest comps improvement in the brand’s history. As well as strong digital sales, which contributed more than 50% of its revenues in the quarter, the brand also benefited from its recent expansion into selling masks.
In contrast, Gap’s eponymous flagship brand experienced a 14% decrease in its quarterly net sales and a 5% decline in its comps. Banana Republic’s net sales fell 34%, while the brand’s comparable sales dropped 30%.
Net income for the quarter totaled $95 million, or $0.25 per diluted share, compared to earnings of $140 million, or $0.37 per diluted share, in the same period in the previous year.
“Our third quarter results reflect our Power Plan 2023 in action,” commented Gap Inc. CEO Sonia Syngal in a release. “With our teams focused on sales growth and returning to profitability, we’ve made investments in demand generation that are driving engagement, particularly in this dislocated market as customers are looking to trusted brands to provide easy and safe shopping options.”
Year to date, Gap Inc.’s net sales were $9.4 million, decreasing 19.9% year over year from $11.7 million. Net loss for the period was $899 million, or $2.41 per diluted share, compared to net earnings of $535 million, or $1.41 per diluted share, in the first nine months of the previous fiscal year.
The company has also announced the appointment of two new executives. Effective January 2021, Asheesh Saksena is joining the group’s senior leadership team as chief growth officer, a newly created position focused on leading the retailer’s growth initiatives.
Having most recently served as president of Best Buy Health, Saksena previously led strategy and growth initiatives at Cox Communications, Time Warner Cable and Accenture.
Sandra Stangl is also joining the company as president and CEO of Banana Republic, a role in which she will help lead the brand’s repositioning efforts, starting December 2020.
Most recently, Stangl co-founded and served as chief merchant of MINE, a home business built around a disruptive pure-play model. Prior to this, the executive spent 23 years at Williams Sonoma, holding a range of leadership roles, including president of Pottery Barn Brands. During this time, she launched the Pottery Barn Kids and Pottery Barn Teen brands.
“With the addition of Asheesh and Sandra, two strong industry veterans and proven creators, I have even greater confidence in our ability to deliver against our Power Plan 2023 as we steer the company into the future,” said Syngal.
Due to the continued uncertainty surrounding the Covid-19 pandemic, Gap did not provide a detailed financial outlook for the fourth quarter or the full fiscal year. Nonetheless, the company did specify that it expects its Q4 net sales to be equal to or slightly higher than in the prior-year period.
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