By Thomas J. Ryan
<span style="color: #a3a2a2;">Athleta’s revenues were up “just shy” of $1 billion with growth of 12 percent on the top-line and low-double-digits in earnings, Teri List-Stoll, GAP’s EVP and CFO, said on the company’s fourth-quarter conference call.
In the year, sales reached $978 million, up from $881 million in 2018. Same-store sales for Athleta grew 5 percent against a gain of 9 percent over the prior year.
In the fourth quarter, Athleta’s sales increased 9.5 percent to $288 million from $263 million in the year-ago quarter. Comps were ahead 2 percent versus 7 percent improvement the prior year.
List-Stoll said despite the growth, Athleta “didn’t have its strongest year when measured by the fundamentals.”
He elaborated, “We made some design talent changes midyear that were intended to strengthen our operational discipline and esthetic consistency. We saw some of the lingering impacts in the fourth quarter, primarily driven by assortment mix challenges along with inventory lateness.”
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During the fourth quarter, Athleta was below adequate stock levels on bottoms and a “bit heavier” on tops and outerwear. The mix challenges were then exacerbated by inventory delays, which led to out-of-stock on key styles, ultimately impacting conversion. Said List-Stoll, “The teams have a strong grasp on root causes and have taken action to implement necessary changes in the product-to-market process. Our sourcing organization is focused on developing even stronger partnerships with key vendors, which is important, given the complex technical nature of this product.”
List-Stoll said that despite the challenges, Athleta continued to gain market share and added that the business “remains a gem in our portfolio.”
Franchise bottoms and girls continue to be areas of strength. Said List-Stoll, “Core bottoms franchises, in both performance and lifestyle, anchor the business and deliver exceptional performance. Limited-edition and novelty items delivered strong results throughout the year and provided differentiation against the competition. The partnership we announced with Allyson Felix, shown above, in July has elevated the brand with media impressions that are driving meaningful awareness and value. The girls’ business continues to post double-digit comps with expansion continuing across the fleet.”
Athleta opened 29 stores in 2019, ending the year with 190. Plans for 2020 call for the opening of 20 stores, in line with the brand’s historical pace of opening 15 to 20 per year.
Said List-Stoll, “Our inclusive brand positioning, unique product offering and high-touch experiential store service model sets us up to win in this competitive retail landscape.”
The CFO added that based on the learnings from the past year, Athleta’s team is completing some in-depth work around customers and assortments that will support its accelerated growth plan. List-Stoll said, “With innovative and sustainable products, beautiful marketing and clear brand equity with the very relevant Power of She positioning, not to mention the unique distinction of B Corp status and less than 50 percent brand awareness, Athleta remains well-positioned to grow and capture market share.”
Photo courtesy Athleta/Allyson Felix
