Gap Inc. on Thursday reported its best second quarter sales in over a decade, as net sales grew 29% year over year and 5% from 2019 to $4.2 billion. Store comps were up 12% compared to 2019; online sales rose 65% from 2019, reaching 33% of sales.
By brand, Old Navy sales rose 21% from 2019, with comps flat to last year and up 18% over two years. Gap net sales fell 10% from 2019, with comps down 5% from last year and up 3% from 2019. Banana Republic net sales fell 15% from 2019, with comps up 41% from last year and down 5% from 2019. Athleta net sales rose 35% from 2019, with comps up 13% year-over-year and 27% from 2019.
The company swung to black in the quarter with $258 million in net income after last year's $62 million loss, according to a company press release.
If the Gap namesake is going to make a comeback after years of decline, it's not really clear how.
It's true that its collaboration with Kanye West completed its first Yeezy Gap presale during the second quarter, with drops of a jacket in two colorways (a third colorway of the same jacket was released in August). The company on Thursday said that 75% of those customers, many "much younger," were new to the brand.
When asked to share more on the company's plans for the collection, however, Gap Inc. CEO Sonia Syngal declined to elaborate, except to say, "We're pleased with the product and the product pipeline that we have coming. The coolness of it will mean we don't fully reveal that much on our earnings call versus out there on Twitter or something, but more to come in the coming months and years."
With a nod to West's own regard for artistic practice, Chief Financial Officer Katrina O'Connell added that the collab entails "a creative process versus a more traditional process and so you know that will lead to incremental excitement as this all builds, but it also leads to a different path. And so, again, the round jacket launch and the customer acquisition being there is really giving us great confidence in the long-term potential of this partnership."
Despite all that excitement, executives aren't baking a Yeezy contribution into their revenue expectations for the fiscal year, several analysts noted Friday. More generally, it looks like the Gap brand and the struggling Banana Republic brands will continue to occupy a back seat to the company's discount Old Navy business and small but rapidly growing Athleta activewear label, according to GlobalData Managing Director Neil Saunders.
Saunders hailed the company's progress in the quarter, along with its just-announced acquisition of 3D fitting room startup Drapr, manufacturing prowess and omnichannel chops as hallmarks of a good business.
"However, as solid as some of these things are and as much as Gap is getting back on track financially, we remain to be convinced that, outside of Old Navy and Athleta, it has any real plans to reinvent its problematic legacy brands," he said.