Gap Inc. reports 43% sales decline, rose 13% online

Global fashion and accessories retailer, Gap Inc. has reported 43% year-over-year decline in net sales, during the first quarter of 2020, ending May 2, while during the same period, its online sales increased 13% year-over-year. Notably, Gap Inc. recorded over 100% year-over-year online sales growth in the month of May.

The company’s first-quarter fiscal year 2020 net sales were down 43% year-over-year, as solid momentum in the first 35 days of the quarter was more than offset by a meaningful deceleration in demand after temporary store closures beginning in mid-March, driven by the COVID-19 pandemic.

In response, Gap Inc. continued to serve customer demand online through its scaled e-commerce platform, which at over $4 billion in net sales in fiscal year 2019, representing about one-quarter of the company’s sales for that fiscal year. The company’s first-quarter 2020 online sales channel increased 13% compared to the first quarter fiscal year 2019, with continued acceleration of online growth following the end of the quarter. On the other hand, the company’s first-quarter 2020 store sales decreased 61% compared to the first quarter fiscal 2019, driven by temporary store closures.

During the quarter, Gap Inc. enacted several measures to strengthen its cash position, as well as secured additional financing early in the second quarter to weather the pandemic. Gap Inc. also leveraged its omnichannel capabilities to continue to serve customer demand online through its scaled e-commerce platform.

“Our teams’ ability to pivot quickly and lean into our strong online business resulted in an encouraging 40% online sales growth in April. While net sales and store sales continued to reflect material declines in May as a result of closures, we saw over 100% growth in online sales during the month,” said Sonia Syngal, president and CEO of Gap Inc. “This online momentum, enabled by new omni-capabilities that have expanded the way customers can shop with us, leaves us well-positioned to fuel our brands going forward.”

Beginning May 9, 2020 Gap Inc. started to reopen stores in select states and countries in accordance with official COVID-19 recommendations provided by the World Health Organization (WHO), Centers for Disease Control (CDC), Public Health Agency of Canada and local government guidelines, as well as the Retail Industry Leaders Association (RILA) and in partnership with industry peers to implement a number of health and safety measures that will support its teams and customers with a safe and seamless shopping experience.

“Today we have more than 1,500 stores open in North America, ahead of plan, and as stay-at-home restrictions ease in many markets, we expect to have the vast majority of our North American stores re-opened in June. We are optimistic that the actions we’ve taken will provide a stable foundation as we navigate near-term uncertainty and refashion Gap Inc. for long-term growth,” Syngal added.

Gap Inc.’s operates brands including Old Navy, Gap, Athleta and Banana Republic, and Katrina O’Connell, EVP and CFO Gap Inc, noted, “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. We intend to lean into our best-in-class supply chain and advantaged omnichannel capabilities to respond as customer demand becomes clearer.”

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