The turnaround at Gap Inc. is gaining momentum as three of its major brands, Old Navy, namesake Gap and Banana Republic, posted growth in the holiday quarter. However, continued weakness at activewear label Athleta and pressure from tariffs weighed on overall profits.
Gap Inc. reported fourth quarter net sales of 4.2 billion dollars, up 2 percent from last year’s. Comparable sales increased 3 percent. Ecommerce sales rose 5 percent while store sales remained flat during the period.
The company’s namesake Gap brand delivered the strongest performance. Sales jumped 8 percent to 1.1 billion dollars and comparable sales increased 7 percent. It was the eighth straight quarter of comparable sales growth for the brand, reflecting renewed consumer interest as the company works to rebuild its cultural relevance.
Two other major brands in the portfolio also recorded growth. Old Navy reported sales of 2.3 billion dollars, up 3 percent, with comparable sales also rising 3 percent. Banana Republic posted sales of 549 million dollars, up 1 percent, while comparable sales increased 4 percent.
The only weak spot in the portfolio remained Athleta. The women’s activewear brand saw sales fall 11 percent to 354 million dollars and comparable sales decline 10 percent as the brand struggles to stand out in an increasingly competitive activewear market.
Profitability also came under pressure during the quarter. Gross margin declined by 80 basis points compared with last year. Tariffs reduced merchandise margins by around 200 basis points, contributing to a drop in net income of nearly 17 percent to 171 million dollars.
Executives said the quarter was also affected by extreme winter weather in the United States, which forced widespread store closures toward the end of January and disrupted sales during the final stretch of the quarter.
Despite those challenges, the performance of the namesake Gap brand, Old Navy and Banana Republic suggests the retailer’s broader brand revival strategy is gaining traction, even as it works to turn around Athleta. Chief Executive Officer Richard Dickson said the company continues to focus on strengthening its core brands while exploring new growth areas such as beauty, which was recently tested in selected Old Navy stores.
