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Gap Records Better Second Quarter Sales

During the pandemic, while many location establishments remained shut, online sales soared for many retail providers, including Gap.

The clothing and accessories firm reports better than expected performance in the second quarter, boosted by online sales.

It recorded a 13% increase in comparable sales year-on-year.

The company’s Athleta experienced an unprecedented rise to fame now that more people are looking for affordable active apparel while they work out from home.

Sales at Athleta went up by 6%, as more people carve time out for home workouts in trying to stay active.

Similarly, Old Navy sales online spiked as consumers look for comfortable clothing while they work from home. However, its sales slumped by 5% overll.

The retail brand’s online sales ascended at an impressive rate of 95% and welcomed 3.5 million new customers on Gap Inc.’s website and app.

It nearly doubled its e-commerce business, with just 50% of online penetration.

Net sales fell, recording an 18% drop to $3.28 billion. Nevertheless, this is above the forecast of $2.91 billion.

The per-share earnings stand at $0.17 from its revenue of $3.28 billion, exceeding the expectations of $2.88 billion and $0.4 earnings per share.

 

Athleta’s Growing Value in Gap Inc.

Although all of Gap’s segments experienced a spike in online sales, Athleta is the only one to report positive net sales.

A Citi analyst noted the retail brand’s untapped potential, saying that it could reach $3.6 billion as a standalone value.

With the growing popularity of athleisure, figures for its 2021 fiscal sales may hit 1.2 billion.

The canceled spinoff for Old Navy may pave the way for Athleta’s own spinoff, but the board confirms nothing so far.

Nevertheless, should corporate actions head towards a spinoff, this will help maximize the brand’s expansive room for growth.

Gap said that it would continuously invest in its business to maintain the sound financial position it currently holds.



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