Markets
GPS

Gap Thinks Athleta Can Be a $2 Billion Business by 2023

The real driver of growth for Gap (NYSE: GPS) has been its women's athleisure wear business Athleta. It was the only brand last quarter that reported an increase in net sales, and it's fast approaching the size of the ailing Banana Republic chain in global sales.

Although Athleta is still its smallest segment, Gap thinks it will double sales to $2 billion by 2023. It said at its investor day presentation on Thursday that the highly profitable business plans to open between 20 to 30 new stores.

Athleta store front

Image source: Gap.

Ready for the marathon

Athleta CEO Mary Beth Laughton delineated the brand's path to $2 billion in sales, driven by its heightened brand awareness among active women.

Citing data from the market researchers at Ipsos, Laughton said 53% of women who work out at least once a week and have made an activewear purchase in the past year are familiar with the Athleta brand.

Moreover, more of Athleta's customers shop the brand across channels, which is important because those who buy online are spending 3.5 times as much as those who shop its stores. Online sales represent over half of the business and continue to expand at double-digit rates.

Gap will be leaning hard into Athleta, but also Old Navy, even as it deemphasizes its Gap stores and those of Banana Republic. It plans to close about 30% of their locations by the end of the 2023 fiscal year.

That means that Old Navy, the biggest brand Gap has, and Athleta will account for about 70% of total sales, up from 55% today. But perhaps equally important for investors in the retailer's stock is Gap saying it plans to return to profitable growth by next year.

10 stocks we like better than Gap
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Gap wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 20, 2020

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

GPS

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More