Gap was hit hard by the closure of 90% of its stores during Q1 2020, resulting in a 43% sales drop and a net loss of $932 million. While e-Commerce sales rose 40% year-over-year in April and 100% during May, total online growth for the quarter was just 13%, below the results reported by some other retailers.
Results for Gap’s individual banners varied, though none escaped the quarter unscathed:
- Gap: Net sales down 50%, store sales down 64% and e-Commerce sales down 5%. However, the brand’s online performance steadily improved throughout the quarter;
- Old Navy: Net sales down 42%, store sales down 60% and e-Commerce sales up 60%. Gap expects the chain’s off-mall strip real estate, which makes up approximately 75% of its store fleet, to be an advantage during the reopening process;
- Banana Republic: Net sales down 47%, store sales down 61% and e-Commerce sales down 2%. The move to casual fashion during the pandemic harmed Banana Republic, and Gap is taking “aggressive action” to improve its inventory mix; and
- Athleta: Net sales down 8%, store sales down 50% and e-Commerce sales up 49%. Athleta was a bright spot for the retailer thanks to strong customer engagement and a well-established omnichannel business model.
Gap stopped paying rent on closed stores during April, which led to Simon Property Group filing a lawsuit over nearly $66 million in rent due. However, the retailer noted that it “remains in active and ongoing discussions with its landlords” and will continue to seek rent relief and other solutions. Gap also is reviewing its total footprint and expects to reduce its number of stores, particularly for the Gap and Banana Republic brands.
Gap is keeping an eye on the future as it enters Q2 despite its recent troubles. The retailer already has reopened more than 1,500 stores and expects to have the “vast majority” back online in June.
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“While we are pleased that store traffic and productivity is exceeding expectations, particularly at Old Navy and Athleta, we continue to plan conservatively as significant uncertainty remains ahead,” said Katrina O’Connell, EVP and CFO at Gap in a statement. “We intend to lean into our best-in-class supply chain and advantaged omnichannel capabilities to respond as customer demand becomes clearer.”
