Gap Inc has added another quarter to its long streak of comparable sales growth, a clear sign that the company’s recovery has taken hold.
The fashion retailer recorded net sales of $4.2 billion in the fourth quarter ended January 31, up 2 per cent year-on-year. Store sales were flat, while online sales increased 5 per cent.
Comparable sales rose 3 per cent, marking the eighth consecutive quarter of positive growth.
“When one or two quarters of growth appear, they can be dismissed as a fluke,” said GlobalData MD Neil Saunders. “Three or four, and the question is whether the momentum will hold.
“But eight consecutive quarters of comparable sales growth present a clear pattern – and in this case, the pattern points to the fact that Gap’s recovery has taken root.”
While the rate of increase was not “punchy”, the consistency is far more important, the analyst said, adding that “the fact that this lift has been made from a standing start is credit to the vision and discipline of the management team.”
The Gap brand continued to be the standout performer, with a 7 per cent uplift in comparable sales in the final quarter, matching the progress made in the third quarter. Saunders considered the results “extraordinary” for a brand that had once been written off and is trying to reinvent itself in a crowded and competitive market.
“That reinvention consists of several strands that are now coming together convincingly: Stronger marketing that has rebuilt cultural relevance, a cleaner and more purposeful assortment, and a willingness to show up with a point of view.
“These things are helping Gap to get more sales from existing customers and are allowing it to expand its customer base across more generations. And it is now doing this without resorting to heavy discounting,” he added.
At Banana Republic, comparable sales grew 4 per cent. Saunders said the brand has gotten its personality back after years of being merely a more expensive version of Gap.
“The latest ranges show what Banana Republic wants to be: A sophisticated lifestyle brand that fuses heritage with fashion. And we are particularly impressed with the newest and most refined store design as recently unveiled in Scottsdale Fashion Square,” he continued.
At Old Navy, comparable sales rose 3 per cent. According to the analyst, the brand’s value proposition continues to resonate across income levels and is supported by the combination of fashion credibility and everyday affordability.
Athleta remained the downside of the company’s results, with comparable sales plunging 10 per cent. Saunders said the brand lacks a distinct look and feel and is being severely punished for its relative blandness in a tight market.
The other issue was the 17 per cent decline in net income, he said, adding that this was driven by tariffs and was justified by the necessity to keep the value equation strong.
For the full year, net sales increased 2 per cent to $15.4 billion and comparable sales grew 3 per cent. Net income decreased 3.3 per cent to $816 million.
The company expects net sales to be up 2-3 per cent in FY26.
