Gap, Inc. executives spoke with analysts following the release of the company’s fiscal first-quarter results, noting that improvements in its first-quarter performance reflected a continued focus on financial and operational rigor, highlighting the solid comparable store sales results for the quarter that ended May 4.

Comp sales for the total company were up 3 percent in Q1, with positive comps, and for all brands.

  • Old Navy posted comps up 3 percent, the highest quarterly comp in three years, with continued strength in the women’s business.
  • Gap’s comps were also up 3 percent, gaining share in men’s, women’s and kids and baby, with women’s performing well again, driven in part by success in the Linen Moves campaign.
  • Banana Republic comps were up 1 percent as the brand continues to focus on strengthening fundamentals.

Turing to Athleta, the company’s women’s focused active lifestyle brand, comps were up a solid 5 percent in the quarter, which company CEO Richard Dickson said reflected better execution against the brand strategy and encouraging signs of customer response to new product innovation. Sequentially, this is a clear improvement from the fourth quarter results that saw Athleta comps down 10 percent and total sales down 4 percent.

Athleta posted net sales of $329 million in the first quarter, increasing 2 percent versus the Q1 period last year.

“Comparable sales were up 5 percent year-over-year, a significant improvement versus negative 10 percent in the fourth quarter, as consumers responded positively to the new product, brand expression and activations,” offered Gap, Inc. CFO Katrina O’Connell. “We’re encouraged by the outperformance of Athleta in the quarter and remain confident in the long-term potential of this incredible brand.”

The company had anticipated a challenging comparison for Athleta in the first half of this year as the brand laps elevated discounting from 2023. In the second quarter, the brand expects to lap the balance of last year’s heavy discounting, and, as a result, the company plans for second-quarter net sales to be down in mid-single-digits versus the prior year as the brand navigates “this unique period.”

Dickson said that while the company expects the promotional volume comparisons for Athleta to improve by the second half of 2024, Q2 has the most challenging comparisons for the brand.

“We are focused diligently executing against our brand reinvigoration playbook and ultimately really starting to see green shoots unfold,” he said, noting that the company saw positive signs of Athleta’s progress in the strategic initiatives the team has been driving.

In terms of trend-right products, Athleta’s product innovation are reportedly gaining traction. “In particular, core bottoms, which is a key loyalty-building category for us, performed particularly well in the quarter,” he said.

“We also saw brand heat coming from our limited edition drops, which we’ve started to gain more and more traction with. We had great innovation Fabric PowerMove, successfully launching new products in Train and Run,” concluded Dickson.

Image courtesy Athleta