Is Gap‘s decade-long exile to the land of fashion irrelevance coming to an end? Perhaps, reports Bloomberg’s Sapna Maheshwari, noting that the shares of the US’s largest apparel chain have surged 37% this year and hit a 10-year closing high in late March.
The rebound in Gap’s stock has been driven in part by February and March same-store sales (those locations open for at least one calendar year) that topped analysts’ estimates. Last week, Gap reported that same-store sales for March 2012 were up 8% compared with a 10% decrease for March 2011. In February, comparable sales rose 4% vs. a 3% decline in 2011. All three of Gap’s big chains enjoyed healthy same-store sales gains in March with Old Navy leading the pack (up 11%), followed by Gap (up 9%), and Banana Republic (up 5%).
A trip to an Old Navy store here in Austin last month with my 13-year-old daughter provides anecdotal evidence that the fashion picture there is brightening. To my surprise we both found floral gauze drawstring-hem tanks we wanted to buy. And did! Later, at Nordstrom a salesman enthusiastically complimented my daughter on her blouse and raised an eyebrow when told it came from Old Navy.
Two months of better-than-expected sales hardly constitute a turnaround. But it’s been a long time since any of Gap’s retail brands put together back-to-back months of same-store sales gains. April sales, which Gap will report on May 3rd, will give a clearer picture of Gap’s performance because of the tougher comparison. All three chains posted positive same-store sales gains in April 2011 (with Old Navy and Bananan Republic posting double-digit gains), thanks to a late Easter.
If April results are good, CEO Glenn Murphy may finally be seen as making progress toward reviving Gap’s North American business. Since joining Gap from a Canadian drugstore chain five years ago, he has struggled to get clothes people want into stores. Now, after several failed attempts, he at last may have assembled a winning team. Over the past 14 months, Gap has fired its star designer Patrick Robinson, relocated the creative team from San Francisco to New York City, coaxed Tracy Gardner to return to Gap (from J Crew) as an advisor, and enlisted plenty of new creative talent.