Gap, Inc. parent of the Old Navy, Gap, Banana Republic, and Athleta retail brands, saw flat overall comps across its brand matrix in the fiscal fourth quarter with mixed results across the portfolio, with Old Navy and the Gap posting comp store sales growth for the period ended January 31 while Banana Republic and Athleta comped down for the period.

Athleta was said to making good underlying progress, but faced tougher comparisons from the prior-year Q4 period, as the brand is lapping significant promotional volume and it’s weighing on the revenue performance.

Fourth quarter net sales were $419 million, down 4 percent compared to the 2022 fourth quarter. Comparable sales were down 10 percent. Athleta’s performance reportedly improved sequentially versus the prior quarter, but sales continued to be challenged due to tougher comparisons as the brand laps a period of elevated discounting in 2022.

Full-year net sales of $1.4 billion were down 8 percent versus in 2022. Athlete comparable sales were down 12 percent for the year.

“Turning to Athleta, as we shared with you last quarter, the brand had missteps in prior years, and as a result, net sales for the brand remained muted in Q4 as we lapped markdowns, a challenge that we will continue to face through the first half of 2024,” shared Gap Inc. CEO Richard Dickson on a conference call with analysts. “Athleta is a brand with significant growth potential and a clear and distinct positioning rooted in the Power of She. Early holiday ideas like cold weather train and our Shine Set sold well.”

He said these “great ideas were ultimately bought too small,” but he said they are good proof points that the brand is on the right track.

“We’re making progress in resetting this brand, returning to the core of Athleta’s positioning,” he offered. “We started the new year with a cleaner pallet and we’ve seen early successes in new arrivals, although the changes are small, we are learning and encouraged by the customers’ early reactions. We’re focused on resetting the brand for success and putting Athleta back at the center of the cultural wellness conversation while reengaging the brand’s performance roots.”

CFO Katrina O’Connell added, “While Athleta sales remain negative from the headwinds related to lapping the prior-year Q4 period’s significant promotions, we’re encouraged by the positive customer reaction to our new assortments, cleaner store presentations, improved online experiences, better marketing execution, and innovative new customer activations, which gives us confidence that the brand’s efforts are driving underlying benefits.”

Turning to full-year guidance for the overall business, O’Connell said that the company’s outlook is for flat net sales year-over-year for the consolidated business, excluding the 53rd week, assumes continued performance at Old Navy and Gap, offset by challenging comparison for Athleta in the first half of the year as the brand laps elevated discounting from 2023 and a longer recovery timeline at Banana Republic.

“We’re pleased with the trends quarter-to-date and are planning for net sales in Q1 to be roughly flat versus Q1 2023,” she shared. “Consistent with our full-year view, our first quarter outlook assumes continued performance at Old Navy and Gap, offset by challenging comparison for Athleta and a longer recovery timeline at Banana Republic.”

Other Brands

Old Navy
Fourth quarter net sales of $2.29 billion were up 6 percent compared to Q4 2022. Comparable sales were up 2 percent. This represents the second consecutive quarter of positive comparable sales at the brand, demonstrating improved consistency in performance and execution.

Full-year net sales of $8.2 billion were flat versus in 2022. Comparable sales were down 1 percent.

Gap
Fourth quarter net sales of $1.01 billion were down 5 percent compared to Q4 2022. Excluding the estimated negative impact on sales of 8 percentage points related to the sale of Gap China, sales would have been up 3 percent versus in 2022. Comparable sales were up 4 percent. Performance was driven by continued strength in Women’s, which gained market share for the fifth quarter in a row.

Full-year net sales of $3.3 billion were down 11 percent versus 2022. Excluding the estimated negative impact on sales of 7 percentage points related to the sale of Gap China, sales would have been down 4 percent versus in 2022. Comparable sales were up 1 percent.

Banana Republic
Fourth quarter net sales of $567 million were down 2 percent compared to Q4 2022. Comparable sales were down 4 percent. While the brand has been making progress in elevating its aesthetic, re-establishing Banana Republic will take time and there is work to be done to better execute many of the fundamentals.

Full-year net sales of $1.9 billion were down 8 percent versus 2022. Comparable sales were down 7 percent.

Image courtesy Athleta