Athleta parent Gap Inc. said the segment’s 4 percent comparable sales decline in Q2 was expected given the heavy discounting that took place in the business in the year-ago quarter. Athleta, forecast to return to positive comparable sales in H2, suffered a 1 percent decline in Q2 sales to $338 million. Still, the gross margin increased by 500 basis points to 42.6 percent, and the merchandise margin grew by 410 basis points year-over-year. About 170 basis points of the merchandise margin improvement was attributed to lower commodity costs, with the remainder derived from incremental credit card revenue and improved promotional activity.
Gap Inc. says it’s pleased with the progress being made to reset the Athleta brand and sees “significant growth potential” ahead for the business that utilized Olympians Simone Biles and Katie Ledecky in a recent marketing campaign for its Anthem collection. In the product area, Athleta is experiencing sales success with core bottoms and limited-edition product introductions.
“We are successfully broadening our customer base, seeing better sell-through at full price. Our marketing execution is gaining traction,” said Gap Inc. CEO Richard Dickson. “Our inventory positions are cleaner and our fashion products are resonating, driven by new merchandising.”
