GAP INC

Part
01
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Part
01

Gap Inc - Growth Performance

Our research found that Gap Inc. has grown in 2017 and 2018, after a two-year slide in 2015 and 2016. Of the specified Gap Inc. brands, Athleta has achieved the greatest growth by far, while its Gap and Banana Republic brands have been in consistent decline over the past five years.

Findings

A. Gap Inc.'s Growth Performance

1. Gross Profit

2. Net Sales

3. Gross Margin

  • Gap Inc.'s gross margin in 2018 was 38.1%.
  • In 2017, the company's gross margin totaled 38.3%.
  • Gap Inc. had a gross margin of 36.3% in 2016.
  • The company's 2015 gross margin amounted to 36.2%.
  • Gap Inc. had a gross margin of 38.3% in 2014.

4. Total Assets

5. Net Income

B. Growth Performance by Gap Inc. Brand

1. Gap

  • The Gap brand had net sales in 2018 that totaled $5.160 billion.
  • In 2017, the brand's net sales were $5.318 billion.
  • The brand's 2016 net sales amounted to $5.455 billion.
  • Gap's net sales in 2015 totaled $5.751 billion.
  • In 2014, the brand had net sales that amounted to $6.165 billion.
  • The brand's comparable sales percentage was decreased by 5% in 2018, 1% in 2017, 3% in 2016, 6% in 2015, and 5% in 2015.

2. Banana Republic

  • Banana Republic had net sales in 2018 that totaled $2.456 billion.
  • In 2017, the brand's net sales were $2.380 billion.
  • The brand's 2016 net sales amounted to $2.471 billion.
  • Banana Republic's net sales in 2015 totaled $2.656 billion.
  • In 2014, the brand had net sales that amounted to $2.922 billion.
  • The brand's comparable sales percentage increased by 1% in 2018, preceded by a 2% decrease in 2017, a 7% decrease in 2016, and a 10% decrease in 2015 (value not stated for 2014).

3. Athleta

  • Athleta was recently described in an article as Gap Inc.'s "success story" after having achieved "double-digit sales growth in the last two years [2017-18]."
  • During "the first half of 2017," Athleta's sales growth was in the mid-teen percentages. However, in the second half of 2017, Athleta's sales growth rose to the mid-20 percentages (exact percentages not specified).
  • In 2018, 14 Athleta stores were opened, in stark comparison to just the one store that was closed, yielding 148 total stores.
  • In 2017, 16 Athleta stores were opened, while there were no store closes, yielding 132 total stores.
  • In 2016, 12 Athleta stores were opened and none were closed, bringing its total store count to 120.
  • In 2015, 19 Athleta stores were opened and none were closed, resulting in 101 total stores.
  • In 2014, 37 Athleta stores were opened, while just one was closed, yielding 65 total stores.

4. Janie & Jack

  • Gap Inc. just recently acquired Janie & Jack, as the acquisition was announced on March 4, 2019. For that reason, growth information about Janie & Jack, as a Gap Inc. brand, is not available. However, we did find that Gap Inc. paid $35 million to acquire Janie & Jack.

Your research team applied the following strategy:

We began our research by combing through Gap Inc.'s annual reports, in order to find information about its performance over the past five years. In so doing, we also looked for such information about its specified brands (Gap, Banana Republic, Janie & Jack, and Athleta). Overall, more information was available for Gap Inc. than for its brands, likely because it's the parent company and those brands are accounted for in its gross performance data. However, we included all the publicly-available growth performance data we found about the specified brands, both from the annual reports and articles we consulted. In total, we referenced three Gap Inc. Annual Reports (2018, 2016, and 2015) in order to compile performance data spanning the past five years.
Part
02
of two
Part
02

Gap Inc - Growth Strategy

Some of Gap Inc.'s future growth strategies include shifting its focus to where customers are shopping (expanding online and digital platforms and rethinking its real estate portfolio); continued significant investment in areas including direct fulfillment capacity, loyalty and personalization (productivity and scale); store expansion and removal of under performing GAP and Banana Republic specialty locations (growth strategy of individual brands).

LONG TERM AND BALANCED GROWTH STRATEGIES:

EXPANDED INVESTMENT IN ONLINE AND DIGITAL

  • Gap Inc. possesses a highly profitable online and mobile business with double-digit sales growth and industry leading capabilities. Over the coming years, Gap Inc. will continue to accelerate its growth using a "continued significant investment" in areas including direct fulfillment capacity, loyalty, personalization, omni-channel services, artificial intelligence and other data-driven customer experiences.

REAL ESTATE PORTFOLIO

  • In the coming years, as a support to its growth strategy, the company will be shifting its focus to where customers are shopping and simultaneously increasing its presence in its more profitable value and online channels.
  • In addition to the above strategy, the company will continue to shed square footage in lower productivity specialty locations.
  • In the coming years, the company is planning to add about 70 net new stores across the portfolio.

PRODUCTIVITY AND SCALE

  • In the future, the company expects about $500 million in expense savings by better leveraging its size and scale, cross-brand synergies and streamlining operations and processes.
  • As another strategy, the company plans to reinvest a portion of productivity-related savings in its growth initiatives, providing opportunity for margin expansion.

GROWTH STRATEGY OF INDIVIDUAL BRANDS

Research Strategy:

We commenced our research by looking for the reports, press releases and articles published by Gap Inc., on its official website. A majority of the press releases and articles were focused on its collaboration with other companies and participation in conferences. However, we were able to gather some relevant articles that we used to answer the client request. The only report/press release that discussed the future growth strategies was published in September 2017 by the company. The report stated the company's plan to implement the growth strategies in the coming years. In fact, the company itself declared in a press release in 2019 that they have been achieving significant growth through implementation of those "balanced growth strategies."

Sources
Sources