August 22, 2014, 3:59 PM

Gap grows the web but not as fast as before

Gap grew web sales 11% in the second quarter, but that’s down significantly from 27% growth in the second quarter of 2013.

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Gap reported a healthy increase in e-commerce sales in the second quarter. But growth online is slowing relative to earlier years, a situation Gap is watching closely, CEO Glenn Murphy told Wall Street analysts on the apparel chain retailer’s most recent earnings call.

For the quarter ended Aug. 2, Gap, No. 19 in the 2014 Internet Retailer Top 500 Guide, reported:

  • E-commerce sales increased year over year 10.5% to $515 million from $466 million. In comparison, web sales grew 27% for Q2 2012 to Q2 2013
  • Total sales grew 3.1% to $3.98 billion from $3.86 billion.
  • Comparable-store sales were flat.
  • Net income was $332 million compared with $303 million in the second quarter of 2013.
  • The web accounted for 12.9% of all sales compared with 12.1% in the prior year.

Web sales growth slowed in part because of less activity among international buyers at Gap.com, although Gap didn’t release details. “Two years of back-to-back 18% [growth] is good, but I’d have my eye on 11%,” Murphy told analysts.

Gap will look for new ways to continue to drive web sales higher, Murphy said. “That 11% was a number we circled at the end of our profit and loss because we know every part of our business has to fire on all cylinders for us to reach our goal,” Murphy told analysts. “And our online business did a decent job in the second quarter, but we are always looking for strength.”

For the first two quarters of 2014, Gap reported:

  • Web sales increased 11.8% to $1.09 billion from $975 million in the first six months of 2013.
  • Total sales increased 2.1% to $7.75 billion from $7.59 billion.
  • The company didn’t release year-to-date comparable-store sales
  • Net income was $536 million compared with $636 million.
  • The web accounted for 14.1% of all sales compared with 12.8% in the prior year.
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