Image: Screenshot of gap.co.uk
Gap Inc has shifted further towards becoming a digital-first business, after a year in which its online sales grew by 54%. Total net sales fell as the group was hit by store closures during Covid-19 lockdowns – and at the bottom line it reported a pre-tax loss of $1.1bn (£0.70bn), 300% down from a profit of $528m (£382.9m) a year earlier.
Online sales came to more than $6bn (£4.35bn) in the year to January 30 and accounted for 45% of total sales - up from 25% a year earlier. The retailer said its online growth reflected its digital platform and omnichannel capabilities. Customer numbers grew by 14% to 183m.
While online sales grew, the retail group closed 228 Gap and Banana Republic stores, including 24 in Europe where it now has a total of 117 shops from a global total of 3,715 shops, of which 3,100 are directly owned.
Sonia Syngal, chief executive of Gap Inc, says: “We faced one of the most difficult years in our company’s history and, throughout, our teams showed resilience and determination as we navigated unprecedented disruption in our industry to set a course for long-term growth.
“Our powerful brands moved to offence with purpose-led marketing and strength in relevant categories like active and fleece, allowing us to gain meaningful market share quarter-over-quarter in a fragmented environment. This was enabled by our $6bn online business and advantaged digital capabilities allowing us to expand our reach to more than 183m customers this year.”
Gap’s full-year figures also show the extent to which the business has moved out of the European market, where only Gap still has stores.
In the year to January 30, Gap Inc reported net sales of $13.8bn (£10bn), 16% down from $16.4bn (£11.9bn) a year earlier. Of that, $11.6bn (-13% at $13.4bn) was in the US, and $329m (-39% to $539m) in Europe. Its Gap brand, ranked Top250 in RXUK Top500 research, turned over $3.4bn (£2.46bn) (-16% from $4.6bn in 2019), of which $2.1bn (-22% to $2.7bn) came through sales in the US and $319m in Europe (-3% to $329m). Gap now has 117 shops in Europe, after closing 24 during the year.
Banana Republic, ranked Top350 in RXUK Top500, turned over $1.5bn (-41% to $2.54bn) of which $2.2bn was in the US and $10bn (-29% to $14bn) in Europe. The retailer does not operate stores in Europe. Gap Inc has 3,715 shops around the world, 3,100 directly owned, and Old Navy is its largest brand.
In the fourth quarter of its financial year, the 13 weeks to January 30, Gap Inc turned over $4.4bn, down 5% from $4.7bn a year earlier. Of that, $82m (-49% from $149m a year earlier) was in Europe and $3.79bn (-0.5% to $3.81bn) in the US. Online sales in the fourth quarter alone were up by 49% compared to the previous year, and represented 46% of net sales – 17 percentage points more than a year earlier. At the same time, store sales fell by 28% following both Covid-19 lockdowns and the decision to close some stores permanently.
Commenting on the figures, Kurt Trauth, SVP of CX strategy and analytics at experience analytics company Stratifyd, says: “Gap’s recent $140 million warehouse investment is a clear indicator that it recognizes the ecommerce growth opportunities for its brands such as Old Navy and Athleta. However, retaining the robust online momentum it’s established will take differentiating itself among other retail giants who have also nailed down their pandemic-driven ecommerce strategies.
“Free shipping and returns are already a standard expectation, and consumers have already moved on to higher expectations in ecommerce, such as retailers accurately recommending the right sizes to avoid exchanges. While companies like True Fit are partnering with Gap to enable this, our analytics show that these AI models still have significant opportunity to improve. Consumers don’t have the patience to wait for clothing that doesn’t fit, and then have to wait another few days for the correct size to be shipped. The Gap will need to pay close attention to how its customers are responding to its evolving ecommerce offerings and respond quickly and appropriately if it plans to return to growth in 2021 and compete with online-only retailers.”
Jared Blank, chief marketing officer at ecommerce and marketplace platform VTEX, says growth at Gap’s Athleta business – where sales grew by 16% to top $1bn during the year – is growing faster than Gap and Banana Republic, showing the consistent popularity of athleisure among shoppers who are still working from home.
“Another sign of optimism is the 49% year-over-year increase in digital sales, which were certainly aided by the omnichannel investments the company has been making over the past few years with buy online, pickup in store, shipping from store, and curbside pick-up making digital purchases more convenient for customers,” says Blank.
via https://AiUpNow.com March 5, 2021 at 08:53AM by Chloe Rigby, Khareem Sudlow,
