The ShippingPass pilot program launched last year and offers free shipping on all orders.
The apparel retailer’s stores and the web no longer compete, the CEO says.
Gap Inc. joins the ranks of retail chains highlighting online growth this week as they report their financial results.
Online sales grew nearly 24% for the retailer’s fiscal year, which ended Feb. 2, and 28% in the fourth quarter. “That was a very good performance by what everyone knows is a critical part of the company’s long-term growth strategy,” chairman and CEO Glenn Murphy told analysts on a conference call yesterday. Gap is No. 22 in the Internet Retailer Top 500 Guide.
Among the other major retail chains reporting big growth in web sales this week were Macy’s Inc., No. 14 in the Top 500, Kohl’s Corp. (No. 28) and Nordstrom Inc. (No. 31).
Murphy emphasized the importance of Gap’s omnichannel strategy of making its bricks-and-mortar stores and e-commerce sites work together. He said the company took a big step toward eliminating competition between its stores and web businesses last fall when it restructured the company by its major brands—Gap, Old Navy and Banana Republic—rather than by stores, online, outlets and international.
“When you take that kind of approach and think of something as simple as order online, reserve in the store, it doesn't matter whose P&L that goes under,” Murphy said.
For the 53-week fiscal year ended Feb. 2, Gap reported:
- Online sales of $1.927 billion, up 23.5% from $1.560 billion in the 52 weeks ended Jan. 28, 2012.
- Online sales represented 12% of company sales during the recent fiscal year, compared with 11% during the prior year.
- Online sales for the retailer’s Gap brand increased 24.0% to $537 million during the recent 53-week period from $433 million in the prior 52-week fiscal year; for the Old Navy brand, web sales grew 17.2% to $748 million from $638 million; and for the Banana Republic brand online sales jumped 31.4% to $247 million from $188 million. For the company’s Piperlime and Athleta brands, online sales grew 31.2% to $395 million from $301 million.
- Online orders shipped from distribution centers outside the U.S. broke down as follows: Canada, $117 million; Europe, $50 million;Japan, $5 million.
- Total company sales increase 7.6% to $15.651 billion in the recent fiscal year from $14.549 billion in the prior year.
- Net income increased 32.1% to $1.1 billion from $833 million.
For the 14-week fourth quarter ended Feb. 2, Gap reported:
- Online sales increased 27.6% to $624 million, compared with $489 million during the 13-week fourth quarter of the prior fiscal year.
- Web sales represented 13% of total sales, versus 11% during the prior-year quarter.
- Online sales for the Gap brand increased 33.1% to $185 million from $139 million, for Old Navy 19.7% to $237 million from $198 million and for Banana Republic 34.9% from to $85 million $63 million. For the Piperlime and Athleta brands, online sales grew 31.5% to $117 million from $89 million.
- Online orders shipped from distribution centers outside the U.S. broke down as follows: Canada, $41 million; Europe, $18 million; Japan, $5 million.
- Total sales increased 10.3% to $4.725 billion from $4.283 billion.
- Net income increased 61.0% to $351 million from $218 million.
Murphy emphasized Gap’s growth in China since launching its first bricks-and-mortar stores and e-commerce site there in November 2010, though the company did not break out sales in that country. It also did not report on online shipments from distribution centers in China because Gap uses an outside company to fulfill orders in the country, a spokeswoman says. Murphy said the company opened 30 new physical stores in that country in 2012, and had 47 open at the end of 2012 as well as its e-commerce site, Gap.cn. The retailer plans to open 35 more stores in 2013. “China is a cornerstone of future growth for Gap Inc.,” he told analysts.
Gap is No. 199 in Internet Retailer’s newly released Asia 500, which ranks the top online retailers in the Asia-Pacific region.