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Gap sees digital sales rocket 61% in Q3 as store sales slump

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Clothing retailer Gap has seen online sales climb 61% in Q3, making up 40% of the company’s total sales – but it isn’t enough to offset a 20% fall in store sales, analysts warn.

The group, which includes Gap, Banana Republic and Athleta, saw a 5% rise in comparable sales to £2.99bn, driven by a 61% rise in online. Net sales were impacted by the company’s ongoing strategy to close unprofitable stores. Gross margin increased 160 basis points versus last year, to 40.6%.

Net sales and comparable sales by brand for the third quarter 2020 compared to the third quarter 2019 across the group were varied. Old Navy Global saw net sales up 15%, with comparable sales up 17%. Old Navy continued to experience meaningful acceleration in its online business as strong customer response to product was further bolstered by compelling and relevant digital marketing investment.

Additionally, the brand’s off-mall and strip real estate locations, which make up approximately 75% of the brand’s fleet, continue to be an advantage, supporting not only in-store sales but customers’ omni purchases, through curbside and buy-online-pickup-in-store (BOPIS), says the company.

Banana Republic Global’s  net sales were down 34%, a slight improvement versus the second quarter. Comparable sales were down 30%. As previously discussed, Banana Republic continues to focus on adjusting to consumer preferences and improving inventory mix by shifting away from the brand’s traditional work wear assortment and into casual fashion during the current stay-at-home environment.

Athleta logged net sales up 35%. Comparable sales were the highest in the brand’s history – up 37% – and online contribution remained above 50% in the quarter.

Athleta continues to benefit from its participation in the highly relevant values-driven active and lifestyle space, strong returns from increased digital marketing investments, and a focused product strategy, which is driving a healthy regular price business. While performance was strong across the brand, masks continued to attract new customers, providing the opportunity to build a relationship across other product offerings.

“Our third quarter results reflect our Power Plan 2023 in action — specifically the strength of our online business, which comprised 40% of sales, and our commitment to meeting the shopping preferences of our customers through our leading omni platform,” says Sonia Syngal, Chief Executive Officer, Gap Inc. “With our teams focused on sales growth and returning to profitability, we’ve made investments in demand generation that are driving engagement, particularly in this dislocated market as customers are looking to trusted brands to provide easy and safe shopping options.”

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