2017 Retrospective: Gap: Growth in Value & Active, L Brands: Tremors from Swim Exit

Retail

As of Friday, December 15, 2017

Gap Inc. has been on shaky ground in the past, but the company has seen four consecutive quarters of positive same-store sales as executives redefine the retailer’s merchandise and strategies.

“We continue to make progress against the balanced-growth strategy we outlined in September, driving efficiency at our more mature brands while growing our footprint in the value and active space and investing in our online and mobile experience,” said Art Peck, Gap’s president and chief executive.

Gap said it expects its value division, Old Navy, to grow by $10 billion in the next few years while Athleta, its activewear division, will grow by more than $1 billion.

In the future, Gap plans to open more Old Navy and Athleta stores and to close 200 underperforming Gap and Banana Republic stores, Gap executives said.

The company opened its biggest Gap flagship in China this year. It’s a two-story structure on the popular shopping street West Nanjing Road in Shanghai. The Gap division also committed itself to using 100 percent organic cotton by 2021.

Tremors from L Brands’ 2016 exit from the swimwear category continued to shake the 2017 business of the parent company of Victoria’s Secret.

Throughout the year, the company blamed declining same-store earnings on the exit. For its third-quarter results announced in November, the shedding of swimwear caused a 2 percent drop in Victoria’s Secret’s comparable-store sales.

While the exit made some Wall Street investors anxious, the move made sense, according to Gabriella Santaniello, a retail analyst quoted by Business Insider. Swimwear was a declining, seasonal business, and L Brands needed to concentrate on its core strengths.