With Gap Inc.’s second-quarter results topping Wall Street estimates for the fourth consecutive quarter, Richard Dickson, CEO, declared that the company is “executing on our brand reinvigoration playbook” designed to drive more relevance across its four banners: Old Navy, Gap, Banana Republic, and Athleta.
“We are building stronger brand identities, supported by trend-right products, amplified through more compelling storytelling with an innovative media mix that is translating to greater cultural relevance,” said Dickson, who became CEO last August, on an analyst call. “We are working to provide our customers with a more engaging omnichannel experience and aim to execute with excellence. Each brand is at a different point in the process.”
The top performer in the quarter was Old Navy, where comps rose 5% to represent four consecutive quarters of gains, according to the earnings report.
Dickson, formerly president at Mattel, said Old Navy is benefiting from strengthening its “brand identity” with “more clarity in pricing and in-store navigation, connecting our customers with products they want and compelling storytelling.”
Market share was gained in women’s with the help of “trend-right products,” as the company regained its lead market share in dresses, according to Circana. “Sizable market share” was achieved in active, while an expanded denim offering is expected to help drive sales in the back half. Dickson called the Summering campaign “a great indication of our new and exciting creative for Old Navy.”
At the Gap banner, comps were up 3% in the quarter, marking five consecutive quarters of share gains for the overall brand and seven in women's.
“We are focused on reigniting Gap's leadership in trend-right products and creative expression through big ideas and culturally relevant messaging, returning to our roots as a pop culture brand,” said Dickson.
Collaborations with two LA-based lifestyle brands, DÔEN and Madhappy, helped increase credibility and reach while campaigns like “Linen Moves” and “Get Loose” are tapping nostalgia around the brand’s music heritage. Dickson said, “Our focus going forward is on repeating these types of creative expressions that leverage our heritage rooted in music and dance and declare a trend statement.”
Banana Republic’s comps were flat in the quarter as the brand remains in the process of reestablishing itself in the premium lifestyle space. Dickson said, “At this stage, we are encouraged to see more stability across our men's business with improved depth of wardrobe and a more distinctive style. We are working to win in women's with better assortment planning, a focus on key items, and improved fit.”
Gap is actively seeking a new Banana Republic president.
At Athleta, comps were down 4% as the women’s active chain lapped heavy discounting in the year-ago period, but its performance is expected to turn positive for the remainder of the year. Dickson said, “We are successfully broadening our customer base, seeing better sell-through at full price. Our marketing execution is gaining traction. Our inventory position is cleaner, and fashion products are resonating, driven by new merchandising.”
Also helping revitalize the company is a commitment to meeting performance metrics, strengthening its operating platform in marketing, digital capabilities, and other areas, and “energizing” its workplace culture. Dickson said, “To be clear, we have work to do because transformation of this scale takes time, but we are on our way.”