Reporter | Qin Siyue
The revenue of GAP Group in the new quarter is still not ideal.
GAP Group's performance in the third quarter of the 2023 fiscal year showed a year-on-year decrease of 7% in net sales to $3.77 billion (approximately RMB 26.168 billion).
GAP is one of the largest clothing companies in the United States, founded by Donald and Doris Fisher in 1969. In 2010, GAP officially entered the Chinese market and opened stores in commercial districts in multiple first tier cities such as Beijing, Shanghai, and Guangzhou.
Unfortunately, the good times didn't last long. In 2019, GAP announced that its Old Navy brand would exit the Chinese market from 2020 and focus on the North American market. Several GAP stores in China have also been closed since 2020.
In November 2022, GAP sold its China business to Baozun E-commerce for $40 million (approximately RMB 289 million). The latter is a contract operation company established in 2007.
At present, GAP company owns multiple brands including GAP, Banana Republic, Old Navy, Athleta, etc.
By brand, all brands under the group experienced a decline in sales this quarter: Gap sales decreased by 15% year-on-year; Banana Republic's sales decreased by 11% year-on-year; Old Navy sales decreased by 1% year-on-year; Athleta's sales decreased by 18% year-on-year.
Due to its enormous potential in the women's sports market, Athleta has always been one of the seed players with high expectations from the group: according to GAP's latest three-year plan "Power Plan 2023" strategy, Athleta has been designated as one of the two main growth drivers.
Like Canadian sports brand lululemon, Athleta has always focused on women's sports. Unlike Lululemon, Athleta, founded in 1998, initially did not have offline retail channels and relied mainly on e-commerce channels for sales.
According to data from third-party organization SimilarWeb, in 2021, while GAP was busy closing stores and downsizing, the browsing volume of Athleta's official website increased by 39% year-on-year, and organic search volume increased by 267%.
According to the "Power Plan 2023" strategy, the company plans to achieve an annual sales target of $2 billion for Athleta by the end of 2023, with a total of approximately 300 stores.
In July of this year, GAP also appointed new coach Chris Blakeslee for this women's sports brand. Chris Blakeslee previously worked at Alo Yoga. During his tenure as the company president, Alo Yoga's annual revenue exceeded $1 billion.
However, based on financial data from the past year, Athleta's performance did not meet GAP Group's expectations: in the third quarter of the 2023 fiscal year, Athleta's same store sales have declined for the fourth consecutive quarter.
GAP CEO Richard Dickson stated that Athleta will refocus on sportswear, weaken its fashion lifestyle collection, and adjust its online and offline product display.
It is interesting that Athleta's performance is poor, and the acquisition of GAP China's Baozun e-commerce is making money through its sportswear business.
According to the 2023 third quarter financial report disclosed by Baozun E-commerce this month, the company's net revenue for the quarter reached 1.8 billion yuan, a year-on-year increase of 5%.
Among them, the operating revenue of sportswear increased by 26% year-on-year; GAP China's gross profit margin reached 56%, an increase of over 10% compared to the same period last year, and the loss amount was significantly reduced compared to the same period last year.
Baozun E-commerce has been very optimistic about the sports footwear and clothing market in the past two years. In August of this year, the company also announced a partnership with the parent company of sports brand Reebok, Authentic Brands Group (ABG): Baozun E-commerce will be responsible for operating the Hunter brand's business in Greater China under ABG Group, and establish a joint venture with ABG Group to acquire 51% of the Hunter brand's intellectual property rights in Greater China and Southeast Asia from ABG Group.
Public information shows that Hunter is a well-known outdoor brand founded in 1857, mainly producing rain boots and rain gear.