Gap sales fall with apparel demand
Masks and activewear were among the few bright spots for Gap Inc., which posted a sales decline of 18% for May, June and July compared with the same period a year ago.
Athleta, which focuses on active and leisure wear, was the only subsidiary of the company to report a sales increase during that time.
Banana Republic, which focuses on trendy office wear, was the weakest of the lot, the company said in its earnings call Thursday.
The San Francisco retailer, which also owns Old Navy, Janie and Jack, and Intermix as well as its namesake Gap stores, saw its secondquarter sales fall to $3.2 billion from $4 billion in the same quarter a year ago.
The company said it brought in about $130 million from selling face masks to people and companies during the threemonth period.
Gap said its secondquarter results improved meaningfully compared with the first three months of the fiscal year.
Online sales skyrocketed, up 95% from the 2019 second
quarter, while instore sales dropped 48% during the coronavirus pandemic.
Gap said it began reopening stores closed as a result of the COVID19 pandemic in May, and by Aug. 1, approximately 90% of its stores worldwide were open.
Sales at Athleta rose 6% compared with a year earlier, while sales at Old Navy fell 5%, sales of Gap brand merchandise were down 28%, and sales at Banana Republic fell 52%. Banana Republic faces the biggest challenge as many Americans continue to work from home and don’t need traditional office attire.
“The pandemic has caused a shift in consumer behavior,” said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University. “Shoppers have no choice but to buy online — even those who love to shop in stores may have inhibitions because of the virus. But as long as people are at home, the need for a stylish wardrobe seems less.”
The retail industry had plenty of troubles before the pandemic, with fewer people visiting malls and neighborhood stores, and an abundance of online competition.
But since March, the industry has faced a worsening crisis as stores have closed, some permanently, and shoppers pulled back on spending amid rising unemployment.
While bankruptcies have mounted among apparel chains pummeled by the coronavirus outbreak, other retailers, such as sporting goods, home goods and hardware stores, have seen sales climb.
Gap is expecting to permanently close 225 underperforming Gap and Banana Republic stores — mostly at malls — this year. Three of four San Francisco Gap stores have recently closed, including the company’s Market Street flagship location.
Gap released its earnings after markets closed. Its shares fell 2% in afterhours trading.