Gap has posted an increase in sales for the second quarter, extending the momentum it has delivered in the prior two quarters.
The company’s net sales for the quarter ended August 3 were up 5 per cent year-on-year to $3.7 billion, with comparable sales also up 3 per cent.
President and CEO Richard Dickson said the company has achieved another “successful quarter”, which exceeded expectations and marked the sixth consecutive quarter of market share growth.
“In comparison to where we were only one year ago, we are in a stronger position across key metrics that matter, and we are making consistent progress in the reinvigoration of our brands,” Dickson added.
GlobalData MD Neil Saunders said the company has taken “a very firm step in the right direction”, which lends weight to Dickson’s argument that the business is on the road to recovery.
Sales in the US grew by a solid 7 per cent, which is market beating and underlines the fact Gap is taking back share in apparel, the analyst continued.
At Old Navy, sales grew 9.9 per cent in the US with a 5 per cent uplift in global comparables. Saunders said the brand is back on the front foot after a period of dire performance thanks to improvements in quality of product range and store environments.
The Gap brand recorded a 6.8 per cent growth in US sales and 3 per cent increase in global comparables, which Saunders described as a “more muted progress”. There is still a lot more work to do to refine and elevate the overall proposition and carve out a more distinct identity, he added.
At Banana Republic, sales declined by 0.2 per cent in the US with flat comparables. According to the analyst, this is not a great performance, but it does represent a material improvement over the sharp declines the brand has posted.
On the bottom line, operating income jumped 176.4 per cent, and net income was up 76.1 per cent, thanks to the sales growth and more discipline around cost control.
For the full year, the company expects net sales to be up slightly on a 52-week basis and operating income to grow in the 50 per cent range.
