American fashion retailer Gap seems to be clear that e-commerce will drive its growth in the post-pandemic world, with a minimal presence in traditional indoor malls.
At least the numbers indicate that! The retailer has seen a massive surge of 89 per cent in its first quarter to clock US $ 4 billion. Compared to 2019, the jump has been 8 per cent.
What’s, however, notable, is the acceleration in the digital dominance of the business. Gap’s online sales made up 40 per cent of its revenue in the first quarter.
Corroborating on the same, Sonia Syngal, CEO, Gap Inc., says that about half or even more of Gap brand’s sales come from e-commerce business.
She added that only around 17 per cent of company’s overall sales came from indoor malls in the first quarter.
Consequently, post pandemic, Gap may be seen less in indoor malls as it closes Gap and Banana Republic locations.
The retailer has also made it clear that going forward it will bet on expanding its Athleta and Old Navy brands. The Q1 net profit of US $ 166 million has been largely due to surges at Athleta and Old Navy. In fact, Athleta’s Q1 sales surged by 56 per cent from the same percentage.
Notably, Athleta crossed US $ 1 billion in annual sales, which Gap believes could double by 2024. The executives expect sales from both Athleta and Old Navy to constitute 70 per cent of the company’s net sales by 2024.
Old Navy, the retailer’s biggest brand, brought in US $ 7.5 billion in revenue last year globally, while Athleta remains the company’s highest-margin business.
Going forward, there are also plans to open at least 30 Old Navy locations and 20 Athleta stores this year.
Gap has also raised its outlook for the year, calling for a sales jump in ‘the low-to-mid 20 per cent range’, from an increase in the ‘mid-to-high teens’.
Ever since Sonia Syngal became the CEO of Gap in March 2020, she has been trying to chart the retailer’s path forward. And she seems to have done a good job so far…
Full Story: New York Times