Gap Earnings Report Q2 2017 - Fashionista

Is Gap Finally Getting Back on Its Feet?

All of Gap Inc.'s brands reported sizable lifts for its critical holiday period.
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Photo: Justin Sullivan/Getty Images

Photo: Justin Sullivan/Getty Images

If there's one all-American retail giant that's been pulling out all the stops in an effort to turn itself around, it's Abercombie & Fitch — but it's also Gap Inc. In recent memory, the conglomerate — which operates Gap, Old Navy and Banana Republic — has been reporting quarter-after-quarter of slumping sales, leading executives to change up their strategy across all brands. Take Gap, which has been hard at work overhauling its product as fast-fashion chains have eaten away at its market share; this past August, the retailer announced plans to focus on faster fashion and activewear as sales kept slipping. 

And after all that, it has to be doing something right: In the fourth quarter of fiscal year 2016, Gap Inc.'s net sales increased 1 percent to $4.43 billion, a $40 million lift from the same period last year. And for the four-week period ending Jan. 28, 2017, net sales increased 2 percent to $828 million, another $15 million from 2016. It was good news for the individual retailers, too: Old Navy reported a 5 percent bump compared to an 8 percent decrease last year; Gap remained flat versus negative 3 percent; and Banana Republic, the most problematic of Gap Inc.'s portfolio, went from negative 14 percent to negative 3 percent.

These lifts may not seem sizable, and from a basic percentage perspective, they're not. But after so many consecutive quarters of cringe-inducing sales, any and all boosts are worth celebrating for the company. Banana Republic, for instance, may still be in the red, but it saw an 11 percent comparable increase. Eleven percent! And during the especially critical holiday period, when there were widespread dips — including a 12.9 percent one in the domestic luxury business — all across retail, it's important to note that Gap Inc. succeeded getting people in stores and online. 

"Against a challenging retail backdrop, we're pleased to report growth in our topline and comp sales during the critical holiday quarter," Art Peck, Gap Inc.'s chief executive officer, said in a press release. "We remain focused on actions that will strengthen our brands and recapture market share."

Looking ahead, the next period — the start of its 2017 fiscal year — will be crucial: Will Gap Inc. manage to not only maintain its sales growth, but increase it, outside the busy holiday period? If faster fashion and athleisure have been working this well thus far, we should expect to see more basics and leggings in the next three months.

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