November 21, 2013, 5:33 PM

Online sales increase 20% for Gap in Q3

The apparel retailer aims to attract web shoppers by letting them reserve items in stores.

Lead Photo

Gap chairman and CEO Glenn Murphy

Gap Inc. reported today a 20% increase in online sales in the third quarter of its fiscal year, a quarter in which the web accounted for more than 80% of the apparel retailer’s revenue growth.

In discussing the quarter’s financial results, company executives touted a new system that allows shoppers to reserve items online for in-store pickup as a way to boost store sales.

“It could, if executed properly, be a bit of a game-changer for us,” chairman and CEO Glenn Murphy told analysts today on a conference call. He said a shopper can reserve an item late at night, come into a store, “then, hopefully, our team can expand on their selection by adding different items,” Murphy said.

He said 652 stores—including most of the 596 Banana Republic locations in North America and about 200 Gap stores—are participating in the reservation program, which rolled out Tuesday after a test at Banana Republic and Gap stores in Chicago and San Francisco. He said he expects more Gap stores will offer it in 2014. There are 978 Gap locations in North America.

Gap is No. 19 in the 2013 Internet Retailer Top 500.

For the third quarter, ended Nov. 2, Gap reported:

  • Web sales grew 20.0% to $589 million from $491 million in the third quarter of the previous fiscal year. The $98 million growth in online sales represented nearly 82% of the retailer’s total growth of $120 million in the quarter.
  • Total sales increased 3% to $3.98 billion from $3.86 billion in the third quarter last year.
  • Comparable-store sales increased 1%.
  • Net income was $337 million, a 9.4% increase from $308 million in the year-ago period.

Online sales represented 14.8% of total sales in the third quarter, versus 12.7% last year.

For the first three quarters of the fiscal year, Gap reported:

  • Web sales grew 24.1% in the first three quarters to $1.564 billion from $1.260 billion in the first three quarters of the prior fiscal year.
  • Total sales of $11.573 billion, an increase of 5.9% from $10.926 billion last year. Of the $647 million revenue increase in the first three quarters, the web accounted for 47%.
  • Net income of $973 million, up 24.1% from $784 million in the same period a year ago.

The web accounted for 13.5% of Gap Inc. sales for the first three quarters of the fiscal year, compared with 11.5% during the same period last year.

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