- Gap reported $4 billion in net sales in the first quarter of 2021, an 89% increase compared with 2020 and 8% lift when compared with 2019 pre-COVID levels. The retailer attributed its sales growth to the marketing investments it made during the past several quarters, coupled with "macro tailwinds" related to the economy's recovery from the coronavirus pandemic, per an earnings call.
- Comparable sales increased 28% year-over-year, and 13% compared with 2019, per its quarterly earnings report. While store sales declined 16% from 2019, online sales grew 82%, contributing to 40% of sales. The company's online channel was ranked second in U.S. apparel e-commerce sales, per the earnings call.
- Purpose-led marketing and creative partnerships have improved the health and relevance of its Gap, Old Navy and Athleta brands, CEO Sonia Syngal said on the call. The company has also identified target customers and cultural trends as it works on a new brand positioning for Banana Republic, which has continued to see declining sales.
After a tough 2020 that included COVID-related store closures and pressures on its supply chain, Gap Inc. topped pre-pandemic sales numbers in Q1, a development the company partially attributed to its recent marketing investments.
"Our teams are maniacally focused on growing our purpose-led billion dollar lifestyle brands and our customers are responding. The marketing investments we've made over the last several quarters to fuel demand, coupled with the macro tailwinds are supercharging our business," CEO Syngal said on the earnings call.
The star of the earnings report was the company's Athleta brand, which saw comparable sales grow 46% versus Q1 2019, with digital sales up 113% in the same period. The brand's "All Powerful" campaign saw engagement at double industry benchmarks and netted more than 160 million impressions across print and digital, Syngal said on the call. The brand counts as ambassadors Allyson Felix and Simone Biles, who left Nike for Athleta in April — two athletes who will likely have a higher profile at the Tokyo Olympics this summer.
The company's flagship brand saw comparative sales increase 29% year-over-year (a 1% dip from 2019 figures), and noted that the recently launched "Generation Good" campaign, which tapped creators and teen activists working for a positive, inclusive future, has resonated with consumers. Former CMO Alegra O'Hare departed in January 2020 after less than a year in the role and was quietly replaced in February 2020 by Mary Alderete, who previously served as CMO of Banana Republic.
Similar to the Gap brand, Old Navy's sales were up 35% year-over-year as new customers spent more at the store, which the company attributed to investments in brand-building storytelling, as with its tie-up with Magic Johnson and a "Vintage Vibes" campaign targeting TikTok users.
Banana Republic sales continued to decline, but the company is hoping to regain relevance in a post-COVID world with a brand repositioning. The company has identified target customer groups and core cultural trends that it hopes will inform the positioning, product design and engagement approach, Syngal explained.
The company is also adjusting to the industry-wide shift in retail from brick-and-mortar stores to e-commerce channels — a shift that was accelerated by the pandemic as consumers stayed in and shopped from home. Its surging online business made up 40% of the company's sales and helped offset in-store declines.
To build on this development, the company will prioritize optimizing its mobile experience, a key channel for e-commerce sales, as it seeks to elevate convenience and create engaging experiences for consumers, Syngal said on the call. In addition, Gap last week partnered with Walmart to launch Gap Home exclusively on Walmart.com, the type of tie-up that can extend the brand reach across product categories, markets and channels, CFO Katrina O'Connell said.