Gap Inc. Sees Big Q2 Gains; Ups Outlook

The retailer delivered its highest second-quarter net sales in more than a decade.

Though Gap and Banana Republic have long been struggling, Sonia Syngal, chief executive officer of parent Gap Inc., says there’s “brand power” across the corporation’s portfolio and that’s fueling better results.

On Thursday, Gap Inc., largely powered by its strong Old Navy and Athleta brands, saw net income rise to $258 million in the second quarter, from a loss of $62 million in the year-ago period, which was heavily impacted by the pandemic.

Net sales of $4.2 billion were the highest second-quarter sales in more than a decade, up 29 percent from $3.3 billion during the 2020 quarter, and up 5 percent compared to 2019 pre-COVID-19 levels. Net income in the last quarter also exceeded the 2019 quarter when profits reached $168 million.

Comparable-store sales increased 12 percent versus the 2019 quarter.

“Our talented teams delivered our highest second-quarter net sales in over a decade,” said Syngal. “Our strategy is driving growth as evidenced by continued strength at Old Navy and Athleta, Gap brand’s second consecutive quarter of positive two-year comparable sales in North America, and momentum gaining at Banana Republic. Stepped-up marketing investments, improved brand management, and technology enhancements are paying off as our brand power cuts through.”

Syngal said sales were fueled by several factors, such as nostalgic ’90s styles, the resurgence of denim, the company’s ability to react quickly to shifting trends, a 50 percent increase in marketing investments over the last several quarters, and greater full-price selling.

As a result of the momentum, the company raised its full-year outlook for sales, operating margin and earnings per share.

Along with Gap Inc., Abercrombie & Fitch also on Thursday reported positive second-quarter top- and bottom-line results, as both retailers benefited from traffic in stores continuing to rise this year after COVID-19 dried it up last year, adults buying more wear-to-work and occasion clothes as they return to offices and socialize more, and kids beginning to outfit for returning to the classroom after learning virtually for the last year and a half.

Both retailers also cited decreased discounting and higher full-price selling, partly due to lower inventories stemming from supply