Gap Inc.’s CEO Richard Dickson told analysts that its Athleta specialty retail chain has “significant growth potential and a clear and distinct brand positioning rooted in the Power of She.” The latter is being accelerated by a rising global interest in women’s sports and female athletes and Athleta’s decision to partner with US gymnast Simone Biles and US competitive swimmer Katie Ledecky.
In Q1 ended May 4, Athleta posted a 5 percent comparable store sales increase on improved trends versus the year-ago quarter as customers responded well to “new products, brand expression, and activitations. The company reported that Athleta’s total Q1 sales rose by 2 percent year-over-year to $329 million as sales of core bottoms performed well and limited-edition product drops gained traction with customers. Gap was also encouraged by the format’s progress in product development, using its PowerMove fabric when launching new products in train and run.
“While we’re really encouraged with the progress we’re making, we do have work to do,” Dickson reminded analysts. “Athleta is also becoming part of the cultural conversation.”
But the chain will experience bumps. It realized a 3 percent Q1 sales growth to $318 million in the US, flat revenues in Canada at $10 million and a 50 percent drop elsewhere to $1 million. Discounting action to move excess inventory isn’t expected to subside until H2. And Athleta’s pending Q2 results, facing a difficult year-over-year comparison, are being forecast down by mid-single digits due to the year-ago quarter’s heavy discounting.
