May 23, 2013, 5:11 PM

Gap’s web sales jump nearly 27% in Q1

E-commerce accounts for 13.6% of the apparel chain’s global sales.

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Gap Inc. generated $509 million in web sales during its fiscal first quarter, the apparel retailer reported today. That’s up 26.6% from $402 million a year ago. E-commerce accounted for 13.6% of net sales during the quarter ended May 4, versus 11.5% during the same quarter a year ago.

Gap did not break out online sales by region, though it did emphasize online developments in a call with investors. Citing the more than 26% growth online, chairman and CEO Glenn Murphy said that the majority of that growth was in sales in North America, and that the retailer is also seeing strong growth in online sales in Canada, Europe, China and Japan. “Online is a key strategic initiative,” he said.

He also announced several initiatives blending online and stores. Murphy said Old Navy will start to fulfill some online orders from stores in its fiscal second quarter, which runs through July, a program it recently put into effect for Gap and Banana Republic. Starting in June, consumers shopping Gap.com or BananaRepublic.com will also be able to reserve products available in stores online. Murphy said both of these efforts will help eliminate the impact of consumers seeing “out of stock” messages online. “When they see [online] something is not available in their size or not in their color, they assume it is not in store,” he said, noting that this will allow the retailer to use its pools of inventory across its online and offline selling channels. “The way to win these days is with great product, great marketing and to give customers access to your business anywhere they want,” he said. 

The retailer did emphasize its previously stated plans to expand sales online and around the world. The retailer said it expects to open 160 company-operated stores during its fiscal 2013, and close 80, many of those in North America. It opened 17 stores in Asia during the first quarter, including nine in Japan.

In North America in the first quarter it opened eight new Gap stores and closed 15, lowering its Gap North America store count to 983. Its Old Navy North America unit opened seven Old Navy stores and closed 12, lowering its Old Navy store count to 1,005. Its Banana Republic North America unit opened two Banana Republic stores and closed three, lowering its Banana Republic store count to 589. Its Athleta North America unit opened five stores, raising its store count to 40. Gap also added one Intermix store in North America during the quarter, raising its count to 32. Gap Inc. acquired Intermix, which sells designer apparel, in January.

For the quarter ended May 4, Gap reported:

  • Online sales increased 26.6% to $509 million, compared with $402 million during Q1 2012.
  • Web sales represented 13.6% of total sales, versus 11.5% during the prior-year quarter.
  • Total sales, including e-commerce, increased 6.9% to $3.73 billion from $3.49 billion a year ago.
  • Net income increased 42.9% to $333 million from $233 million.
  • Comparable sales increased 2%; a year ago comparable sales were up 4%.

Gap Inc. Direct, the retailer’s e-commerce unit, is No. 19 in Internet Retailer’s Top 500 Guide. To learn more about how chain retailers are fulfilling web orders from store inventory, look in for the story “Repackaging Stores” in the June issue of Internet Retailer, available June 1. 

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