Gap Inc. delivered an earnings and sales beat as its online business nearly doubled year-over-year amid coronavirus-related lockdowns.
For the three months ended Aug. 1, the retail group posted a loss of 17 cents per share and an 18% drop in revenues to $3.28 billion. Both figures, however, were still better than analysts’ forecasts of a loss of 41 cents and revenues of $2.91 billion.
In a press release accompanying its financial results, Gap attributed the performance to a 95% increase in online sales, offset by a 48% decline in physical store sales, which was impacted by partial closures during the quarter. What’s more, comps were up 13% as Gap’s e-commerce business added more than 3.5 million new customers during the quarter.
“Our strong performance in the second quarter reflects the customer response to our brands, products and experiences, particularly as we’ve rapidly adapted to the changing environment,” CEO Sonia Syngal said. “I’m confident that our purpose-driven lifestyle brands, size and scale, and advantaged digital capabilities are helping us win now and position us for growth in the future.”
According to Gap, the second-quarter results “improved meaningfully” compared with the first three months of the fiscal year. As COVID-19-related restrictions were lifted by state and local authorities, the company — parent to its namesake brand, as well as the Old Navy, Banana Republic and Athleta banners — began reopening its outposts during the month of May. Today, approximately 90% of its global fleet is back in business.
The chain has 3,814 locations across 42 countries — of which 3,215 are company-operated. As part of its previously announced “fleet optimization” strategy, it added that it expects to close another 225 Gap and Banana Republic stores around the world this year, with additional closures expected in 2021.
At the end of the quarter, Gap had $2.2 billion cash and equivalents, versus $1.1 billion at the beginning of the period. It did not provide an outlook for the rest of the year.
“Our strong financial position, healthy cash flow generation and our continued execution of initiatives to drive profitable growth provide the foundation to emerge from the crisis well-positioned to compete in a rapidly evolving marketplace,” said CFO Katrina O’Connell. “Recognizing the uncertainty ahead, we remain committed to amplifying our distinct advantages and leveraging our scale to capture share as demand recovers.”