Gap’s upbeat quarterly results show improving demand for Old Navy apparel

BENGALURU/NEW YORK – Gap beat Wall Street expectations for fourth-quarter results on March 7, buoyed by strong demand on improved product offerings at its Old Navy and namesake brands during the holiday season and on lower markdowns.

Chief executive Richard Dickson’s plans to push ahead with reinventing Gap’s brands, mainly Old Navy, have helped drive consumer interest in its clothing and accessories.

The Banana Republic parent had seen sales slump in the past several quarters as customers moved to competitors, such as Amazon.com and Shein, that offer compelling product assortments.

Fourth-quarter comparable sales for the Gap brand rose 4 per cent and Old Navy saw a 2 per cent increase, while Athleta and Banana Republic sales slumped 10 per cent and 4 per cent respectively.

Lower supply chain costs related to freight and manufacturing, and price increases on some products such as leggings and skinny jeans, helped the company’s gross margin jump 38.9 per cent, an increase of 530 basis points.

However, Gap expects fiscal year 2024 net sales to be flat compared with US$14.89 billion (S$19.8 billion) in 2023. Analysts had expected a 0.48 per cent rise, according to LSEG data.

Gap’s forecast signals that improving its product assortments, mainly at Athleta and Banana Republic, could take longer than expected.

“They can edit and curate better, and can work colour and colour combinations better,” said Ms Leslie Ghize, executive vice-president of Coller Davis & Co, a division of retail consultancy Doneger Tobe.

Gap’s fourth-quarter net sales rose 1.3 per cent to US$4.30 billion, beating estimates of US$4.22 billion.

The company reported a profit of 49 US cents per share, beating estimates of 23 cents. REUTERS