Apparel retailer Gap Inc (GPS.N) reported a surprise 13% rise in quarterly comparable sales on Thursday, as consumers stuck at home due to the COVID-19 pandemic bought more of its Old Navy and Athleta clothing online.
People working or studying from home have been stocking up on comfortable “stay at home” clothes including fleece and activewear, boosting demand for the company’s budget-friendly Old Navy brand, athleisure label Athleta as well as Gap clothing.
Same-store sales rose 13%, compared with analysts’ forecast of a 20.97% fall, according to IBES data from Refinitiv.
The San Francisco-based retailer said it nearly doubled its e-commerce business for the quarter ended Aug. 1, with about 50% online penetration, and added about 3.5 million new customers.
“We won in the value space with Old Navy, and we won in the premium space of Athleta,” Chief Executive Officer Sonia Syngal told analysts, adding that the company sold about $130 million worth of masks alone.
While the company expects demand for the two brands to fuel sales, it plans to close over 225 unprofitable Gap and Banana Republic stores globally as a part of its restructuring plan.
The back-to-school season, one of the busiest periods for the company, could extend longer and Gap is ready with the “right assortment” for kids whether they are learning at home or in a classroom, Syngal said.
Gap reported second-quarter net loss of $62 million, or 17 cents per share, compared to a profit of $168 million, or 44 cents per share, a year earlier.
Net sales fell about 18% to $3.28 billion, but were above expectations of $2.91 billion.